The U.K. economy contracted unexpectedly in October 2024, according to data from the Office for National Statistics (ONS).
Gross Domestic Product (GDP) fell by an estimated 0.1% on a monthly basis, the ONS said Friday 13th December 2024, attributing the downturn to a decline in production output.
It marked the second consecutive economic downturn, following a 0.1% GDP decline in September 2024. Sterling declined on the back of these disappointing figures, trading 0.3% lower against the U.S. dollar in early trade.
However, ‘real’ GDP is estimated to have grown 0.1% in the three months to October 2024, the ONS said, compared to the previous three months ending in July 2024.
In a statement on Friday 13th December 2024, U.K. Finance Minister Rachel Reeves reportedly conceded that the October figures were ‘disappointing,’ but defended the government’s economic strategies. I expect the chancellor would have been quick to own the success had the GDP improved – especially after the ‘for growth’ budget.
The economy has grown just once over the past five months and is 0.1% lower than before Labour won the election. That may suggest it’s not just the Budget that is holding the economy back. Instead, the drag from higher interest rates may be lasting longer than was calculated.
Either way, be it budget or inflation pressure – the UK economy isn’t growing.
UK GDP January 2022 – October 2024
Note: preliminary ONS figures may be revised in future assessments