The United Kingdom’s gross domestic product (GDP) decreased by 0.1% in October, following a similar decline of 0.1% in September, primarily due to a reduction in production, the Office for National Statistics (ONS) reported on Friday.
Finance Minister Rachel Reeves has unveiled a budget that includes substantial tax increases, particularly for businesses, along with significant borrowing intended for investment.
“Although this month’s figures are disappointing, we have implemented policies aimed at fostering long-term economic growth,” she stated in a press release on Friday.
Economist Yael Selfin suggests that the overall fourth quarter “may be characterized by a slowdown in growth, as companies contend with the heightened tax burdens introduced in the budget, coupled with escalating geopolitical uncertainties,” which include conflicts in the Middle East and Ukraine, as well as the election of Donald Trump in the United States.
“However, we anticipate that an increase in public spending will drive GDP growth in the coming year,” he added.
In this environment of sluggish growth, the Bank of England will need to determine on December 19 whether to maintain its current interest rates, which are set at 4.75%.
