UK economy contracts in October

The data released on Wednesday indicate that the UK economy contracted in October, with gross domestic product falling by 0.3% from September.
This marks the first month-on-month contraction since July, contrary to expectations for no change in GDP.
Despite avoiding contraction in three months to September period, there are concerns among economists that the UK may enter a shallow recession in late 2023 and early 2024, particularly due to the Bank of England’s increases in interest rates.

The BoE is expected to keep the Bank Rate at 5.25%, which is a 15-year high, in an effort to control inflation, even though it has adverse effects on economic growth.
The central bank is likely to signal that it is not close to cutting interest rates.
The data also reveals contractions in key sectors of the economy, with the services sector contracting by 0.2% in October, manufacturing shrinking by 1.1%, and construction contracting by 0.5%.

Overall, the information suggests a challenging economic environment for the UK, with a contraction in GDP and concerns about the potential for a recession amid efforts to address inflation through higher interest rates.