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The UK economy shrank again in October, according to official figures, underscoring the scale of the challenges facing Rachel Reeves in her mission to restart the economy.
The Office for National Statistics (ONS) said manufacturing fell by 0.1 percent, following a 0.1 percent fall in the previous month.
The drop is an unexpected blow to Ms Reeves, as most economists had expected GDP to rise by 0.1 per cent for the month.
The latest figures cover the month ahead of the government’s first budget, in which Labor unveiled a £40bn tax hike.
Labor has put economic growth at the heart of its plan for the economy, but there are concerns that the scale of the tax hike could undermine the plans.
Liz McKeown, director of economic statistics at the ONS, said: “The economy contracted slightly in October, with services showing no overall growth and manufacturing and construction falling.
“Oil and gas extraction, pubs and restaurants and retail had weak months, partially offset by growth in telecoms, logistics and legal firms.
“However, the economy still grew slightly over the past three months overall.”
Shadow chancellor Mel Stride said the impact of falling growth figures “will be felt by families through higher taxes, fewer jobs, higher prices and higher interest rates”.
He said: “No wonder businesses are sounding the alarm. This drop in growth shows the stark impact of the Chancellor’s decisions and the continued contraction of the economy.”
However, the Confederation of British Industry (CBI) said British firms “remain hopeful that things will improve in the New Year”.
“It may take a few more months for businesses to work through the impact of the sharp increase in employment taxes outlined in the budget and adjust their employment and investment plans accordingly.
“But companies can probably still look forward to a steady, if unspectacular, economic recovery next year as the impact of the inflationary shock fades and interest rates fall further,” said Ben Jones, the organization’s chief economist.
He added: “The government can support business confidence by accelerating measures that could restore some room for investment.
“This includes providing flexibility to the apprenticeship levy, preparing a faster timetable for business rates reform and working in full partnership with governing boards to develop a long-term modern industrial strategy that can provide the stability and certainty needed to unlock innovation, investment and growing economies.”
More to come…