The UK’s Gross Domestic Product (GDP) declined by 0.1% month-on-month in October for the second consecutive time and below expectations of 0.1% growth, and follows a fall of 0.1% in September and growth of 0.2% in August.
The latest fall was largely because of a decline in production output of 0.6%, following a drop of 0.5% in September.
Despite contracting GDP, many industry experts predict that the Bank of England will still hold interest rates at its meeting next week.
Kate Nicholls, Chief Executive of UKHospitality, said: “Today’s figures are extremely worrying and show just how fragile the UK economy remains.
“The economy shrinking in October reflects a concerted slump in consumer, business and investor confidence. This was before the Budget, which dealt businesses yet more costs, the consequences of which are still to come.
“The changes to employer NICs, particularly the lowering of the threshold, hits hospitality disproportionately hard and has already slammed the brakes on any investment decisions, which are much-needed to drive growth.
“We are continuing to urge the Government to rethink its decision to go ahead with this damaging change in its current form, and instead work with industry on alternatives that mitigate the impacts on businesses, team members and economic growth.”
Isaac Stell, Investment Manager at Wealth Club said: “The UK economy continued to lose momentum during October as GDP contracted by 0.1%. These latest figures will send a chill through the corridors of Westminster, as the Government’s growth agenda looks increasingly at risk and almost certainly opens the door to the possibility of one final rate cut before the year is out.
Services output, the engine room of UK economic growth, recorded no growth in October, while Production and Construction declined by 0.6% and 0.4% respectively.”
This latest reading further compounds the negativity surrounding the government’s latest Budget following the increase in taxes on businesses which will potentially slow growth even further. With more and more companies stating they will cut back on hiring and investment to deal with the rising costs related to the Budget, the question will be, where will Growth actually come from? However, given this latest decline, there is a real possibility that the BoE could cut rates at their December meeting, helping to deliver some much-needed festive cheer to the UK PLC and consumers alike.”