UK economy shrinks again in October in blow to Starmer’s budget – live updates

The value of imports from the EU increased by £1.2 billion (5.0%) in October 2024. This was because of a £0.5 billion rise in imports of machinery and transport equipment and a £0.3 billion rise in fuel imports (Figure 3).

The rise in imports of machinery and transport equipment was driven by increased imports of aircraft from Germany and cars from Spain. The rise in fuel imports was because of increased imports of refined oil from the Netherlands.

The UK’s production output is estimated to have fallen by 0.6% in October following a fall of 0.5% in September.

This was caused by a 0.6% decrease in manufacturing and a fall of 3.1% in mining and quarrying.

The ONS said these falls were “partially offset” by growth of 1.4% in electricity, gas, steam and air conditioning supply and a 0.5% growth in water supply; sewerage, waste management and remediation activities in October.

The largest contribution to the fall was a 2.0% decrease in mining and quarrying. Electricity, gas, steam, and air conditioning supply also decreased by 1.2%.

Confederation of British Industry (CBI) said UK firms “remain hopeful that things will improve in the New Year”.

“It may take a few more months for firms to work through the impact of the sharp increase in employment taxes outlined in the Budget and adjust their hiring and investment plans accordingly.

“But businesses can probably still look forward to a steady, if unspectacular, economic recovery next year as the impact of the inflation shock fades and interest rates come down further”, Ben Jones, the organisation’s lead economist said.

He added: “The government can support business confidence by accelerating measures that could restore some headroom for investment.

“These include delivering flexibility to the Apprenticeship Levy, preparing a faster timetable to reform business rates and working in full partnership with boardrooms to develop a long-term modern industrial strategy that can provide the stability and certainty needed to unlock innovation, investment and grow the economy.”

• Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in October 2024, largely because of a decline in production output; this follows a fall of 0.1% in September 2024.

• Real GDP is estimated to have grown by 0.1% in the three months to October 2024, compared with the three months to July 2024, with growth in the services and construction sectors in this period.

• Monthly services output showed no growth in October 2024 after also showing no growth in September 2024, but grew by 0.1% in the three months to October 2024.

• Production output fell by 0.6% in October 2024, because of falls in manufacturing, and mining and quarrying output, following a fall of 0.5% in September 2024; production output fell by 0.3% in the three months to October 2024.

• Construction output fell by 0.4% in October 2024, following a growth of 0.1% in September 2024, but grew by 0.4% in the three months to October 2024.

Shadow chancellor Mel Stride said the impact of the declining growth figures will be “felt by families through higher taxes, fewer jobs, higher prices and higher interest rates”.

He said: “It is no wonder businesses are sounding the alarm. This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.”

The latest figures cover the month ahead of the government’s first budget, which saw Labour unveil £40bn worth of tax rises.

The Independent’s Political Correspondent Millie Cooke reports:

Chancellor Rachel Reeves, responding to October’s GDP statistics, said: “We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere. This is what our Plan for Change is all about.

“While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth.

“We have put public finances back on a stable footing, capped the rate of corporation tax at the lowest level in the G7, established a £70 billion National Wealth Fund to drive growth in our towns and cities, launched a 10-year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.”

The latest figures from the ONS come after it recorded 0.1% growth between July and September, a slowdown on the 0.4% increase between April and June.

Liz McKeown, the ONS’s director of economic statistics, said: “The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.

“Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms.

“However, the economy still grew a little over the last three months as a whole.”