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Experts predict pre-Christmas interest rate cut The economy is now “ruined” after a shock contraction in October.
Pre-budget concerns and speculations about tax hike The economy has been blamed for this after it unexpectedly contracted for the second time in as many months.
Official data showed the economy shrank 0.1 percent in October after a 0.1 percent decline in September. This means the UK economy has grown only once in the last seven months.
Most economists were expecting a smaller growth of 0.1 percent for October, led by a rebound in manufacturing. jaguar land roverRecovery after a major cyber attack.
But today’s data means a rate cut – to 3.75 per cent – is now highly likely when the Bank’s Monetary Policy Committee makes its decision on Thursday.
Ruth Gregory, deputy chief UK economist at Capital Economics, said the surprise contraction is “further reason to be hopeful Bank of England To cut interest rates.”
Meanwhile, Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales (ICAEW), said ahead of Christmas interest rate The cut was now “nailed on”.
“These data confirm a bad October for the economy, ex-Budget Despite a manufacturing boost from Jaguar Land Rover’s return to production, there are concerns activity will stall in key sectors.
“This disappointing result is likely to be followed by a similarly turbulent November, with frenzied speculation ahead of the Budget damaging business and consumer confidence, which could bring broader economic activity to a halt.”
He said the after-effects of the budget could mean Britain’s economic prospects would be “worse in the near term”.
“These disappointing data are likely to increase fears among rate-setters about the health of the UK economy, with a policy easing in December looking likely.”
The Office for National Statistics (ONS) said car manufacturing had made only a “modest” recovery from the Jaguar Land Rover crisis.
Many businesses have recently indicated that activity in the economy has slowed in the lead up to the Budget due to increased speculation over potential tax measures.
PwC chief economist Barrett Kupelian said the “big story” behind the data is that speculation around the budget “has kept households and businesses in a wait-and-see situation.” And he warned that the timing of the Budget in late November means that “the November GDP print is likely to look similarly low before any post-Budget impact is visible.”
Andy Haldane, the former chief economist of the Bank of England, said last month that long-standing concerns over the budget and the leak over potential tax rises had “let businesses and consumers down”.
Chancellor earlier this week Rachel Reeves Hit out at “a lot of leaks” ahead of the budget, which he described as damaging.
Shadow Chancellor Sir Mel Stride said the latest GDP shock was “a direct result of Labour’s economic mismanagement”.
ONS data showed month-on-month car production activity rose 9.5 per cent more in October. However, this was only a partial improvement from the 28.6 percent decline in September following the cyberattack.
JLR was forced to halt production of its cars for more than a month after it was targeted by hackers and gradually resumed production in October.
A Treasury spokesperson said: “We are committed to defying growth forecasts and creating good jobs so everyone is better off, while also helping us invest in better public services.”