The figures come as a setback for the brand new Labour authorities and its pro-growth agenda.
The UK financial system shrank by 0.1% in October, following a contraction of the identical scale in September, stated the Workplace for Nationwide Statistics on Friday.
The figures mark the primary back-to-back fall since March and April 2020, when the UK entered its first COVID-19 lockdown.
Economists polled by Reuters had anticipated a 0.1% acquire.
The providers sector confirmed no development, whereas output within the manufacturing and building industries fell in October.
The information comes as a setback for the brand new Labour authorities, who’ve put financial development on the coronary heart of their political marketing campaign.
For the reason that July election, finance minister Rachel Reeves has tried to reasonable short-term aspirations.
When unveiling her funds in October, she warned of an financial “black gap” left by the earlier authorities.
“Whereas the figures this month are disappointing, we have now put in place insurance policies to ship long-term financial development,” Reeves stated in a press release on Friday.
With roots in commerce union actions, the Labour Social gathering underneath Prime Minister Keir Starmer has been working to show itself as a business-friendly authorities.
Politicians will now face an uphill battle to get a few of these enterprise leaders again on aspect – significantly as nationwide insurance coverage prices rise for employers.
There are additionally issues that the hike in employer tax could possibly be handed on to staff if companies in the reduction of on hiring.
“The contraction in October might be regarding for the brand new Authorities because it gives a stark reflection of the hit to the financial system from the uncertainty working as much as the Funds, when customers and companies descended right into a state of panic over what measures the Chancellor may ship,” stated Alice Haine, Private Finance Analyst at Bestinvest by Evelyn Companions.
“Whereas the Authorities was eager to focus on its efforts to defend working individuals from larger taxes, the fallout from the measures imposed on companies may have even larger penalties for employees,” she added.
Job vacancies notably plummeted in November, falling on the quickest fee because the begin of the pandemic.
In response to the OECD, development forecasts for subsequent 12 months are nonetheless set to be stronger for the UK than the eurozone.
The group predicts UK development at 1.7% in 2025, in comparison with a eurozone forecast of 1.3%.
Excessive borrowing prices have constrained spending throughout each areas, though rates of interest are actually on a downward trajectory.