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UK economy contracts in October

Bigger-than-expected monthly shrinkage and stagnant three-month picture fuels pressure for rate cuts next year.

13 December 2023

Data released this morning showed a larger-than-expected contraction in the UK economy for the month of October. Gross Domestic Product (GDP) registered a -0.3% drop on the month, more than the -0.1% expected by economists.

Industrial production fell by -0.8% against expectations of a -0.1% drop while manufacturing tumbled by -1.1% when it was expected to remain flat. This means in the three months to October, overall output was zero - not what the Chancellor was hoping for.

While this does not signify a recession is here, it does raise questions of whether one is not far off, and this stagnant picture of the UK economic performance will keep up the pressure on the Bank of England to begin to cut rates next year. Tomorrow we have their interest rate decision, but, with inflation pressures outweighing any downturn signs, do not expect any change right now from them.

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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.

Charles Hepworth

Investment Director
My Insights

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