Economy shrinks mildly in October

GDP reading: GDP decreased 0.1% month-on-month in seasonally adjusted terms in October (September: -0.1% mom), contrasting market expectations for an expansion. On a rolling quarterly basis, GDP grew 0.1% in August–October, matching July–September’s uptick.

Drivers: The drivers behind the month-on-month contraction were lower manufacturing and construction output, while services output was flat.

Panelist insight: On Q4, Goldman Sachs analysts said: “The latest activity figures are consistent with our view that growth is likely to disappoint relative to expectations […]. We therefore revise down our 2024Q4 GDP growth forecast to 0.0% (vs. 0.3% previously).” On the 2025 outlook, ING’s James Smith said: “We still think that the UK economy is poised to outpace most of Western Europe next year, judging by our 2025 annual GDP forecasts. That perhaps says more about the health of other parts of the continent, but it also heavily reflects the recent fiscal stimulus. Public spending was increased by some £60bn – or more than 2% of GDP – relative to budget plans inherited from the previous Conservative government.”

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