The latest official UK economic output figures make for grim reading.
Data published today by the Office for National Statistics reveal that the UK economy went into reverse in October.
It had stagnated in the third quarter, even though gross domestic product rose by 0.2% in September.
The ONS’s latest seasonally adjusted figures show that UK GDP dropped by 0.3% month-on-month in October. This was a significantly worse outturn than had been expected, with economists polled by Reuters having overall expected the economy to have stagnated in October.
READ MORE: Pubs group selling pints for £2.50 or less opens in two new Scottish locations
It was no surprise to hear fears of recession voiced.
And the debate over the Bank of England’s decisions on interest rates was once again to the fore in the wake of publication of the monthly GDP data.
If anyone was looking for some bright spots in the breakdown of the GDP data, they would surely have been disappointed.
READ MORE: Ian McConnell: Prestwick Airport and ferry joy amid Tory gloom
Manufacturing output dropped 1.1% month-on-month, with 10 of the 13 sub-sectors recording contraction.
The overall production sector shrank by 0.8%.
And the bad news did not stop there.
READ MORE: Ian McConnell: SNP has guts to tell it as it is as Starmer echoes Sunak on Brexit
Services output dropped by 0.2% month-on-month in October, and the construction sector shrank by 0.5%.
Monthly data can be volatile.
However, comparing the three months to October with the May to July period, the UK economy was stagnant.
The EY ITEM Club think-tank observed: “The UK economy contracted in October, with output falling in all of the main sectors. Monthly data can be very noisy, but the fact that output was flat on a three-month-on-three-month basis was broadly consistent with the weak trend in recent business surveys.”
It flagged its belief that “we should see growth return in November”, but added: “Further strike action in the health sector in December raises the risk that GDP declines over Q4 as a whole. And with another doctors’ strike scheduled for early January, the economy is unlikely to carry much momentum entering the new year.”
Martin Beck, chief economic adviser to the EY ITEM Club, highlighted the broadly based nature of the decline in UK GDP in October. And he noted the weakness of consumer-facing services activity.
He said: “GDP fell by 0.3% month-on-month in October, losing all the ground it had made up in the previous two months. The breakdown showed that all three of the major sectors shrank for the first time since July.
“The decline was primarily driven by a fall in services activity. Consumer-facing services activity fell for the fourth consecutive month, following a weak set of retail sales. Meanwhile, fewer working days lost to public sector strikes in October caused a rebound in health activity, but this boost was more than offset by broad-based weakness across the rest of the services category.”
Thomas Pugh, economist at accountancy firm RSM UK, warned the UK’s recession indicators were now “flashing red”. He flagged a “significant risk” of recession next year.
Other experts too highlighted the danger of recession for a UK economy that has for years now not had its troubles to seek.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel