The UK’s economy shrank unexpectedly in October, according to the latest official figures.
The economy contracted by 0.1%, the Office for National Statistics (ONS) said, whereas economists had been expecting it to grow by 0.1%.
Over the three months to the end of October the economy also shrank by 0.1%, as manufacturing output fell and services growth stalled, the ONS said.
“Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month,” ONS director of economic statistics Liz McKeown said.
The government has made economic growth one of its key priorities.
A Treasury spokesperson said the government was working to boost economic growth through reducing energy bills and major infrastructure investments.
“We are determined to defy the forecasts on growth and create good jobs, so everyone is better off, while also helping us invest in better public services,” the spokesperson said.
Shadow chancellor Sir Mel Stride blamed the Budget for the unexpected economic contraction.
“For months, Rachel Reeves has misled the British public. She said she wouldn’t raise taxes on working people – she broke that promise again. She insisted there was a black hole in the public finances – but there wasn’t.”
Over the three months to October, production output shrank by 0.5%, largely driven by a 17.7% fall in vehicle manufacturing.
The cyber-attack on Jaguar Land Rover halted production at its plants across the UK for the whole of September, and there was a staged return to factory activity from early October.
The resumption of vehicle manufacturing helped lift production output across the UK for that month, which grew by 1.1%.
However, the ONS noted the rebound in vehicle manufacturing had been small, as it was still well below levels seen in August.
The services sector, which includes areas such as professional services and retailing, did not grow at all in the three months to October.
Ruth Gregory, deputy chief UK economist at Capital Economics, said the surprise contraction in the economy strengthened the case for the Bank of England to cut interest rates at its meeting next week.
“It’s striking that the economy has only grown in one of the past seven months,” she said.
Jack Meaning, UK chief economist at Barclays bank and a former adviser at the Bank of England, told the ‘s Today programme the figures showed the economy was “unambiguously weak”.
“It’s continuing the story we’ve seen more or less all the way through this year of growth decelerating from relatively strong numbers at the start to much weaker numbers now, and actually outright contraction,” he said.
“Ultimately part of the story today is that we didn’t see as much of a bounce-back of that Jaguar Land Rover closure as we had expected. We thought that would all bounce back pretty quickly; it looks like it might take a little bit longer.”
Mr Meaning added that data from Barclays indicated that the uncertainty ahead of the Budget weighed on the economy as people “held off purchases and big spending decisions”.
