UK economy contracted again in October; GDP fell 0.1% m/m
2024.12.13 02:13
Investing.com – The UK economy contracted again in October, with economic activity in the sixth largest economy in the world remaining very subdued, pointing to further interest rate cuts by the Bank of England in 2025.
Data released earlier Friday by the Office for National Statistics showed that the contracted by 0.1% in October, matching the prior month, resulting in annual growth rate of 1.3%.
This was a lot weaker than expected, as the October GDP release had been expected to have risen 0.1% in October, an annual increase of 1.6%.
The cut interest rates last month by 25 basis points, reducing its base rate to 4.75% from 5%, a continuation of the recent trend toward easing borrowing costs after rates reached a 16-year high.
This result points to another easing of monetary policy next week, but the Bank of England also has to contend with the first budget from the new Labour government which saw a dramatic increase in borrowing as well as tax rises.
The UK’s increased by 0.1% in the third quarter of 2024, compared to the previous quarter. This was slower than the 0.5% growth in the second quarter.
The International Monetary Fund forecasts that the UK will grow by 1.1% in 2024, which is slower than previous periods but would put the UK in the middle of the pack of the world’s leading nations.
