The UK economy contracted by 0.1% in October, according to the Office for National Statistics (ONS).
Economists in a Reuters poll had expected growth of 0.1%. It follows sluggish expansion of 0.1% in the third quarter of the year, according to last month’s figures.
The surprise fall in gross domestic product (GDP) was driven by construction and production, while the dominant services sector stagnated.
Output in the services sector registered no growth in October, with production contracting 0.6% and construction registering a 0.4% fall.
ONS director of economic statistics Liz McKeown said: “Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms.”
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The figures point to a weak start to the fourth quarter after growth slowed to 0.1% in the three months to September, down from 0.5% in the previous quarter. The new Labour government won the UK general election in July with a manifesto commitment to “secure the highest sustained growth in the G7”.
The UK’s output has grown slowly since the COVID-19 pandemic. Only Germany, which was also hit hard by surging energy costs after Russia’s invasion of Ukraine, has done noticeably worse among the largest advanced economies.
Chancellor Rachel Reeves said: “We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere. This is what our Plan for Change is all about.
“While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth. We have put public finances back on a stable footing, capped the rate of corporation tax at the lowest level in the G7, established a £70bn national wealth fund to drive growth in our towns and cities, launched a 10-year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.”
Sterling fell 0.4% against the dollar immediately following the data release.
Isaac Stell, investment manager at Wealth Club, said: “This latest reading further compounds the negativity surrounding the government’s latest budget following the increase in taxes on businesses which will potentially slow growth even further.
