Britain’s economy unexpectedly shrank in October before Rachel Reeves’s budget, official figures show, as activity failed to regain momentum after the cyber-attack on Jaguar Land Rover.
Figures from the Office for National Satistics (ONS) showed gross domestic product fell by 0.1%, after a 0.1% drop in output in September. City economists had predicted a 0.1% rise in October.
It comes as the Bank of England mulls cutting interest rates next week amid a slowdown in headline inflation and fears over a sluggish growth outlook and rise in unemployment.
The latest snapshot will probably cement City predictions for a sixth reduction in borrowing costs since the summer of last year, after the chancellor’s budget included a number of inflation-cutting measures alongside sweeping tax rises.
Threadneedle Street has said Reeves’s policies – including relief on energy bills, prescription charges and fuel duty – could cut headline inflation by as much as half a percentage point next year.
Economic output fell in September after hackers breaching JLR’s systems resulted in the country’s second-largest carmaker halting its UK production lines for several weeks.
In an incident estimated to have cost the economy at large up to £1.9bn, the halt crippled hundreds of smaller companies in the manufacturer’s supply chain, causing monthly output in the car industry to collapse by a third.
More details soon …