UK economy shrank unexpectedly before budget, data shows
Britain’s economy shrank unexpectedly in October as consumers held back on spending before Rachel Reeves’s budget, and car manufacturing struggled to recover from the cyber-attack on Jaguar Land Rover.Figures from the Office for National Statistics (ONS) showed gross domestic product fell by 0.1%, after a 0.1% drop in output in September.City economists had predicted a 0.
1% rise in October.After a fourth consecutive month without growth, economists said the latest snapshot would probably cement a Bank of England interest rate cut next week amid fading inflationary pressures, fears over the sluggish outlook, and rising unemployment.The Bank is widely expected to cut rates by a quarter of a percentage point to 3.75% when it announces its latest decision on 18 December.“The UK economy has faltered more dramatically than we expected,” said Andrew Wishart, a senior UK economist at Berenberg.
“This loss of momentum will bring inflation down more swiftly than we previously anticipated, allowing the BoE to act.”Highlighting caution among businesses and households in the run-up to the chancellor’s tax-raising budget, the ONS said a sharp 0.3% decline in output in Britain’s dominant service sector contributed most to the fall.Much of the decline was driven by a weakness in car sales and broader retail spending, alongside a slump in computer programming and consultancy activities.Construction output fell by 0.
6%, while the production sector – which includes manufacturing – rose by 1.1% amid a recovery from the JLR attack that was weaker than hoped for.The ONS said businesses across all three main sectors of the economy – services, manufacturing and production – reported that they, or their customers, were “waiting for the outcomes of the budget”.The biggest impact was felt by manufacturers, construction companies, wholesalers, computer programmers, real estate firms and employment agencies.Scott Gardner, an investment strategist at JP Morgan Personal Investing, said the chancellor’s budget had a “numbing effect” on the economy.
He said: “Budget speculation and uncertainty around potential tax changes dampened the mood among businesses and consumers, leading some to delay key decisions until the budget had been delivered.“With growth now firmly in the slow lane, there is a clear feeling that the economy this year has taken two steps forward and one step back.”Financial markets widely expect the Bank to cut interest rates for a sixth time since last summer at its next policy meeting on Thursday.Threadneedle Street has said Reeves’s policies – including relief on energy bills, prescription charges and fuel duty – could cut headline inflation by as much as half a percentage point next year.Mel Stride, the shadow chancellor, said the government’s “economic mismanagement” had directly contributed to the weakness in economic growth.
A Treasury spokesperson said: “We are determined to defy the forecasts on growth and create good jobs, so everyone is better off, while also helping us invest in better public services,”Over the three months to the end of October, GDP also fell by 0,1%, below City estimates for zero growth over the period,Economic output fell in September after hackers breaching JLR’s systems resulted in the country’s second-largest carmaker halting its UK production lines for several weeks,In an incident estimated to have cost the economy at large up to £1.
9bn, the halt crippled hundreds of smaller companies in the manufacturer’s supply chain, causing monthly output in the car industry to collapse by a third.However, the ONS warned there had only been a “small recovery” in output in October as activity rebounded by 9.5%, leaving the industry still 21.8% below the levels seen in August.Overall manufacturing output rose by 0.
5%, falling short of City estimates for a 1% recovery from the JLR attack,Sanjay Raja, the chief UK economist at Deutsche Bank, said the latest monthly fall in overall GDP increased the chances of a drop in fourth-quarter output,“The road to the new year will be bumpy,” he said,“Budget uncertainty combined with weak hiring and rising unemployment fear will likely see spending and investment more subdued to end the year,”
Dragon’s teeth and elf garden among 2025 additions to English heritage list
If Nazi tanks had ever attempted to invade Guildford, they surely would have been thwarted by concrete pyramid-shaped obstacles known as “dragon’s teeth”.Eight decades after the defences were installed in Surrey woodland, their history is being remembered by Historic England (HE), which has included them on its list of remarkable historic places granted protection in 2025.The heritage body publishes a roundup of unusual listings to draw attention to the diversity of places that join the national heritage list for England each year.As well as the anti-tank defences, this year’s list of 19 places includes a revolutionary 1960s concrete university block, a model boat club boathouse built in 1933 by men who were long-term unemployed, and a magical suburban “elf garden”.Claudia Kenyatta and Emma Squire, the co-CEOs of HE, said the listings provided a connection to the people and events that shaped communities
Jimmy Kimmel on Trump: ‘What a child he is’
Late-night hosts dug into Donald Trump’s back-pedaling over footage of the controversial Venezuela boat strikes and a White House UFC fight for his 80th birthday.On Jimmy Kimmel Live!, the host checked in on the US president’s economy talk, as he once again condemned use of the word “affordability”:“The reason he’s out talking about the economy is that he wants to convince us that it’s good, which it isn’t,” Kimmel explained. “But we also don’t know how bad it is because we stopped reporting job numbers. It’s like if the NBA just stopped keeping score. ‘We won
Discover Australia’s top 50 children’s picture books as nominated by Guardian readers
Put in your library reservations, plump up your beanbag: Guardian Australia can now reveal the best Australian picture books poll shortlist.Voting in the poll itself will open on 27 January at theguardian.com/bestpicturebook, which gives you a little under 50 days to read your way through these 50 nominees, the oldest of which was first published in 1973, and the newest in 2022.As a reminder, our eligibility criteria for nominees was:Primarily intended to be read aloud to children who don’t yet read independently.Able to be read in a few minutes – a child’s picture book, rather than a graphic novel or illustrated chapter book
Jon Stewart on Fifa’s peace prize: ‘An entirely fictitious golden butt plug’
Late-night hosts mocked Donald Trump for gleefully accepting the inaugural Fifa peace prize ahead of the World Cup in the US.On the daily show on Monday evening Jon Stewart roasted Donald Trump for accepting the inaugural Fifa peace prize at the World Cup draw on Friday. “Oh my God, he won the prize specifically created to appease him!” he joked. “The Fifa appease prize!“I don’t know if you guys got a good look at the trophy, but come on,” he laughed before a photo of the trophy, sculpted to appear as though several hands rising from below cupped the world.“I think its design somewhat reflects, in all likelihood, how it was conceived
Joyful, irreverent, endlessly quotable: why Hunt for the Wilderpeople is the perfect holiday movie
Picking a Christmas movie is hard work. It needs to be suitable for the entire family, which rules out Die Hard, and entertaining for the whole family, which rules out It’s a Wonderful Life. It has to be good, which rules out Love Actually, and it has to suit distracted viewing, which rules out Muppet Christmas Carol, of which it’s a sin to miss a single second.There is, however, no rule that says Christmas movies must include Christmas. Which is why Taika Waititi’s Hunt for the Wilderpeople is the perfect Christmas movie
‘True activism has to cost you something’: Bridgerton’s Nicola Coughlan on politics, paparazzi and parasocial fandom
Back in 2008, when Nicola Coughlan was at drama school, a guy in her class swaggered over and, with all the brimming confidence of young men in the noughties, asked her, “Do the Irish think the English are really cool?” Coughlan, born in Galway, mimes processing the question. “Well,” she said, “it’s quite complicated. Like, there’s a lot of history there, between the two countries. Like, there’s a lot going on.”The Guardian’s journalism is independent
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