UK economy Shrinks Unexpectedly in October

Britain’s economy shrank unexpectedly in October as consumers held back on spending before the budget, and car manufacturing struggled to recover from the cyber-attack on Jaguar Land Rover.

Figures from the Office for National Statistics (ONS) showed gross domestic product fell by 0.1%, after a 0.1% drop in September. city economists had predicted a 0.1% rise in October.

After a fourth consecutive month without growth, economists said the latest snapshot would probably cement a Bank of England interest rate cut next week amid fading inflationary pressures, fears over the sluggish outlook, and rising unemployment.

The Bank is widely expected to cut rates by a quarter of a percentage point to 3.75% when it announces its latest decision on 18 December.

“The UK economy has faltered more dramatically than we expected,” said Andrew Wishart,a senior UK economist at Berenberg. “This loss of momentum will bring inflation down more swiftly than we previously anticipated, allowing the BoE to act.”

Highlighting caution among businesses and households in the run-up to the chancellor’s tax-raising budget, the ONS said a sharp 0.3% decline in output in Britain’s dominant service sector contributed most to the fall.

Much of the decline was driven by a weakness in car sales and broader retail spending, alongside a slump in computer programming and consultancy activities. Construction output fell by 0.6%, while the production sector – which includes manufacturing – rose by 1.1% amid a recovery from the JLR attack that was weaker than hoped for.

The ONS said businesses across all three main sectors of the economy – services, production and construction –