UK Economy Shrinks Again in October Amid Lower Services, Construction Output

06:52 AM EST, 12/12/2025 (MT Newswires) -- The British economy recorded another contraction in October after a rebound in production failed to offset services and construction slumps, reinforcing market expectations that the Bank of England will cut its key rate at next week's monetary policy meeting. The UK's monthly gross domestic product edged down 0.1% in October following a 0.1% decrease in September, according to data from the Office for National Statistics published Friday. The latest figure missed the consensus estimate of a 0.1% rise. On a yearly basis, the economy expanded by 1.1%, unchanged from the previous month but lower than the expected 1.4% gain. ONS data showed that monthly output in the production sector grew 1.1% in October, after a 2% drop in September. In contrast, the services and construction industries respectively saw a 0.3% and 0.6% decline in output, after both logged a 0.2% growth previously. "October's GDP underscores just how much difficulty the UK economy is going through as the government searches for some sort of growth. Growth is estimated to have fallen by 0.1% in October, mimicking the 0.1% contraction seen in last month's data and comes despite production output growing as Jaguar Land Rover restarted its operations following the cyberattack-induced shutdown," said Lindsay James, investment strategist at Quilter. "This figure also misses what were already low expectations and doesn't bode well for next month's figure either." In the three months ended October, the UK GDP also declined 0.1%, compared with the 0.1% uptick in the prior three-month period. "The economy contracted slightly in the latest three months, as production fell again and services growth stalled. Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month," ONS Director of Economics Liz McKeown said. "Overall services showed no growth in the latest three months, continuing the recent trend of slowing in this sector." Following the latest GDP data, market watchers are keeping their eyes peeled on the Bank of England's rate move, which is set to hold its final monetary policy meeting of 2025 on Dec. 18. "These figures make it increasingly likely the Bank of England will have to lower rates next week when it meets, but with inflation remaining persistently high, the pace at which subsequent cuts can be delivered remains questionable," James noted.