The UK economy unexpectedly shrank by 0.1 per cent in October, according to official data from the Office for National Statistics, marking a second consecutive month of contraction after a similar fall in September. Economists had largely expected modest growth, but the figures showed output dipping again, extending a run of weak performance that has seen no expansion since June. Services and construction activity both declined during the month, while production recorded a modest rise that failed to offset losses elsewhere. ONS data also showed that on a rolling three month basis to October, gross domestic product fell by 0.1 per cent, reinforcing the sense that momentum has drained from the economy as the year draws to a close. The services sector, which dominates UK output, was flat or negative across several components, while construction contracted and production recovered only partially from disruption earlier in the autumn. The figures followed stagnation in August and contraction in September, pointing to continued fragility. The October contraction landed as the Treasury faced heightened scrutiny over fiscal and monetary settings. The data arrived shortly before a closely watched Bank of England interest rate decision and weeks after Chancellor Rachel Reeves delivered her autumn budget. Market participants took the figures as further evidence of cooling economic activity, adding to expectations that the Bank could soon begin easing borrowing costs after a prolonged period of tight monetary policy. Sector level data highlighted where pressure is most acute. Retail and consumer facing services showed subdued activity, reflecting cautious household spending. Construction output fell again, adding to concerns about investment and housing related demand. Manufacturing provided a rare bright spot, helped by the resumption of car production following temporary stoppages earlier in the year, though the rebound was not enough to prevent overall contraction. The run of weak monthly data has fuelled wider concern about the UK’s growth outlook. Several months of flat or falling output have raised questions about the durability of the post inflation slowdown recovery and the extent to which higher interest rates have weighed on demand. Other indicators released in recent weeks have also pointed to restrained consumer behaviour and hesitant business investment. Figures published alongside the GDP release showed services output falling by around 0.3 per cent in October, while construction declined by roughly 0.6 per cent. These falls outweighed an increase of just over 1 per cent in production output. Supply chain disruption earlier in the autumn continued to ripple through activity data, contributing to uneven performance across sectors. The timing of the data has sharpened focus on the economic backdrop facing the new government. The October snapshot offers an early glimpse of conditions confronting ministers as they seek to balance fiscal discipline with pressure to revive growth. Business groups and investors have been closely watching how budget decisions and regulatory signals interact with already weak activity. Financial markets reacted swiftly to the GDP figures. Sterling edged lower against major currencies following the release, while government bond yields moved as traders reassessed the outlook for interest rates. Expectations for a rate cut in the coming months strengthened as investors digested the evidence of slowing output. For MPs, the October contraction adds another complication to an already difficult policy environment where inflation remains above target and growth is elusive. Attention will now turn to upcoming data releases and the Bank of England’s next steps as officials gauge whether the economy can regain momentum in early 2026. With GDP flat or shrinking in several recent months, the October decline reinforces concerns that the UK economy remains stuck in low gear, even as political attention shifts towards restoring confidence and stability....