What's happened
Official figures show the UK economy contracted by 0.1% in October, marking the second consecutive monthly decline. The slowdown is linked to pre-Budget uncertainty, a cyberattack on Jaguar Land Rover, and subdued consumer spending. Economists expect a Bank of England rate cut next week amid ongoing economic fragility.
What's behind the headline?
The recent GDP figures confirm that the UK economy is in a fragile state, primarily driven by external shocks and policy uncertainty. The cyberattack on JLR has had a lasting impact, with car production only partially recovering in October. Meanwhile, pre-Budget speculation has created a 'wait-and-see' environment, suppressing activity across sectors. This contraction will likely prompt the Bank of England to cut interest rates at its upcoming meeting, aiming to stimulate growth and reduce inflation. The government’s focus on delaying pro-growth measures until after the Budget suggests a cautious approach, which may prolong the economic slowdown. The data underscores the importance of clear policy signals to restore confidence and support recovery, but immediate prospects remain subdued without significant policy intervention.
What the papers say
The Scotsman reports that the contraction was widely blamed on pre-Budget worries and tax hike speculation, with firms urging Scottish policymakers to cut business rates to support high streets. Sky News highlights that uncertainty and the cyberattack on JLR contributed to the slowdown, with economists predicting a rate cut next week. The Guardian emphasizes that the economy has not grown since June, with weak consumer and business confidence driven by political and economic uncertainty. Holly Williams from The Independent notes that the figures reinforce expectations of a Bank of England rate cut, citing the impact of the cyberattack and pre-Budget hesitancy. Across all sources, there is consensus that external shocks and policy uncertainty are key drivers of the recent contraction, with some pointing to the potential for monetary easing to counteract the slowdown.
How we got here
The UK economy has experienced a period of stagnation since June, with GDP either flat or declining over the past four months. Contributing factors include the cyberattack on Jaguar Land Rover, which disrupted car manufacturing, and heightened uncertainty ahead of the November Budget. Businesses and consumers delayed spending amid speculation over potential tax hikes, further dampening growth. The data reflects a broader slowdown across sectors, with manufacturing, services, and construction all showing signs of contraction or stagnation.
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More on these topics
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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Jaguar Land Rover Automotive PLC is the holding company of Jaguar Land Rover Limited, a British multinational automotive company with its headquarters in Whitley, Coventry, United Kingdom, and a subsidiary of Indian automotive company Tata Motors.
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
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Andrew G. Haldane, FAcSS is the chief economist and the Executive Director of Monetary Analysis and Statistics at the Bank of England.
In 2014 he was named by Time Magazine as amongst the world's 100 most influential people.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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PricewaterhouseCoopers is a multinational professional services network of firms headquartered in London, United Kingdom, operating as partnerships under the PwC brand.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.
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His Majesty's Treasury (HM Treasury or the Treasury) is the United Kingdom's economic and finance ministry. It maintains control over public spending, sets economic policy, and works to deliver economic growth. It is led by the Chancellor of the Exchequer