Blow to Reeves' growth drive as UK economy shrinks again

THE UK economy contracted by 0.1% in October, marking the second month of consecutive decline, as businesses held back on investments due to ongoing speculation about potential tax increases in Chancellor Rachel Reeves' second Autumn Budget.

- SAMUEL NORMAN

Chancellor Rachel Reeves on Budget Day last month

(Bloomberg)

The Office for National Statistics (ONS) released figures that dealt a further blow to the Chancellor's growth strategy, revealing a 0.5% contraction in production output and a 0.3% decrease in construction.

The crucial services sector, which is believed to constitute over 80% of the economy, saw no growth. Economists had previously predicted a modest growth of 0.1% for the month.

Liz McKeown, director of economic statistics at the ONS, said: "The economy contracted slightly in the latest three months as production fell again and services growth stalled."