UK Economy Shrinks in October – ONS
The UK economy contracted again in October, official data showed Friday, dealing a blow to the Labour government’s hopes of reviving economic growth.
Britain’s gross domestic product (GDP) fell 0.1 percent in October following a contraction of 0.1 percent in September, the Office for National Statistics (ONS) said in a statement. Analysts had forecast growth of 0.1 percent.
In its official report, ONS announced that real gross domestic product (GDP) is estimated to have fallen by 0.1% in the three months to October 2025, compared with the three months to July 2025.
This follows a growth of 0.1% in the three months to September 2025 and 0.2% in the three months to August 2025. The 0.1% fall in the three months to October 2025 was the first three monthly fall in real GDP since December 2023.
Statistics office hinted that there were falls in two of the three main sectors in the three months to October 2025, with a fall of 0.5% in the production sector. This was largely because of a 17.7% fall in the manufacture of motor vehicles, trailers and semi-trailers, which made the largest contribution to the decrease in GDP during this period.
Construction output also fell, by 0.3%, while services output showed no growth over this period. This continues the recent trend of slowing growth in the service sector since March 2025. In Oct, UK services fell by 0.3% and construction fell by 0.6%, whereas production grew by 1.1%, in October 2025.
Manufacturing rebounded in the month as carmaker Jaguar Land Rover resumed operations after a cyberattack that had weighed on the UK economy in September. But analysts noted that businesses and consumers reined in spending ahead of Britain’s highly expected annual budget.
“Business and consumers were braced for tax hikes, and the endless speculation and leaks have once again put a brake on the UK economy,” said Lindsay James, investment manager at Quilter.
Prime Minister Keir Starmer’s Labour party raised taxes in last month’s budget to slash state debt and fund public services. At the same time, Britain’s economic growth was downgraded from next year until the end of 2029, according to data released alongside the budget.
Finance minister Rachel Reeves raised taxes on businesses in her inaugural budget last year — a decision widely blamed for causing weak UK economic growth and rising unemployment.
She returned in November with fresh hikes, this time hitting workers. Analysts said that Friday’s data strengthened expectations that the Bank of England would cut interest rates next week.
