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UK GDP: Dire Data to Trigger Pre-Xmas Interest Rate Cut for Millions of Borrowers
UK GDP shrank 0.1% for a second month due to weak services, construction decline, and car manufacturing issues, raising expectations of an interest rate cut by the Bank of England.
- ONS estimates show UK GDP fell 0.1% in October after a 0.1% drop in September, marking a second consecutive monthly contraction that pulled three-month growth lower.
- Budget uncertainty led businesses across production, construction and services to delay activity while awaiting the outcome of the November 26 Budget, analysts and the ONS linked the slowdown to Chancellor Rachel Reeves's plans.
- Within production, services contracted by 0.3% and construction fell 0.6% while production rose 1.1% in October, ONS director Liz McKeown noted Jaguar Land Rover cyber-attack disrupted output.
- Analysts say the surprise 0.1% contraction fuels expectations the Bank of England will cut rates by 0.25% to 3.75% on Thursday, triggering lower lending costs for millions.
- The economy has grown in only one of the past seven months and forecasters see interest rates moving toward 3% next year amid longer-term forecasts and inflation uncertainty.
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As GDP shrinks, it is not clear where the economic jump-start will come from
The slowdown should remove any lingering doubts that the Bank of England will agree an interest rate cut when it meets next week, the expected quarter-point trim taking the headline figure below 4% for the first time since January 2023.
·United Kingdom
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As GDP Shrinks, It Is Not Clear Where The Economic Jump-start Will Come From
A monthly contraction in GDP of 0.1% in October, and a similar fall in the three-month trend, was attributed to uncertainty about Rachel Reeves’s plans amid an autumn blizzard of trails, leaks and speculation. The ONS said businesses across the “production, construction and services” reported waiting for the outcome of the budget. It was not the only factor – output was pulled down by the continued impact of the Jaguar Land Rover cyber-shutdown …
Coverage Details
Total News Sources11
Leaning Left1Leaning Right0Center3Last UpdatedBias Distribution75% Center
Bias Distribution
- 75% of the sources are Center
75% Center
L 25%
C 75%
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