Economic slowdown intensifies in UK amid weak services and construction

The UK’s Office for National Statistics (ONS) announced today (Friday) that the country’s gross domestic product (GDP) fell by 0.1% in October compared to the previous month.

This decline follows a 0.1% drop in September, marking the second consecutive month of negative monthly growth. The ONS also reported that the UK economy contracted by 0.1% in the three months ending in October, a sign, analysts say, of slowing growth momentum in the second half of the year and a fragile path out of recession.

Detailed figures indicate that the main pressures in October came from the services and construction sectors, with services output falling by 0.3% and construction declining 0.6%, the worst monthly performance for the sector. In contrast, manufacturing grew by 1.1%, but this increase was insufficient to offset the declines in services and construction.

The ONS’s supplementary reports highlight that the drop in services was particularly pronounced in certain sub-sectors, including retail, automotive sales, and some tech-related activities. For instance, data for computer programming, consultancy, and related activities show a significant monthly decline, which, combined with weakness in consumer-driven areas, contributes to an overall picture of subdued demand and cautious business sentiment.

In the construction sector, official statistics show that the October decline affected both new projects and repair/maintenance work. After only slight growth in September, the sector fell back again in October. Market participants cite high financing costs, investor caution, and lower new orders as the main pressures on construction.

Industrial and automotive production fluctuations have also been attributed to the cyberattack on Jaguar Land Rover. The incident in late summer disrupted production lines, and reports indicate that its effects on supply chains and monthly data have not yet fully dissipated. While car production grew month-on-month in October, the three-month picture remains weak, and the temporary improvement has not altered the overall economic trend.

In financial markets, today’s data have fueled speculation about a potential shift in Bank of England monetary policy. English media reports indicate that following the release of the figures, expectations for an interest rate cut at the upcoming BoE meeting on December 17 have increased, with markets seeing a higher probability of such a move.

The UK Treasury has sought to send a reassuring message, emphasizing the government’s growth targets, but economic institutions and business lobbies warn that the country’s problems cannot be solved by a single budget package. Recent forecasts, while slightly more optimistic for next year’s growth, stress the temporary nature of some stimuli and the persistence of structural bottlenecks.

Observers note that continued monthly negative growth, if repeated in the coming months, could be not only an economic warning but also a political test for the Keir Starmer government. Starmer came to power pledging to “repair the economy” and reduce living costs, but is now facing weak growth, hesitant investment, and recession in key sectors like services and construction.

Analysts argue that in such an environment, any signs of consecutive setbacks could erode public trust in government effectiveness and increase the political cost of difficult budgetary decisions—especially as households and businesses experience the effects of policies not in statements, but in bills, interest rates, and employment prospects.