The UK economy unexpectedly contracted in October, making its second consecutive downturn, according to the official data released this morning by the Office for National Statistics (ONS). The Gross Domestic Product (GDP) fell by 0.1% on a monthly basis, diverging from the economist expectations of a 0.1% rise. ONS attributed this contraction due to the decline in the production output.
The reading is matching previous month, September, which also saw a 0.1% drop in GDP. In spite of being two bad consecutive months, on a quarterly basis, real GDP showed a growth of 0.1% in the three months leading to October compared to the previous quarter ending in July. International economic pressures and domestic challenges are raising concerns about the strength and sustainability of the UK economic recovery.
After releasing the news, the value of the British Pound was falling against the US Dollar and against the Euro by 0.3% which is another signal of investors concern about the UK prospects.
In response to the report, Finance Minister, Rachel Reeves, admitted the October GDP data was disappointing. She pointed that measures such as a cap on corporation tax and the introduction of a 10-year infrastructure strategy are forward-looking approaches that could change future growth for the better.
