BUSINESS – Britain’s economy unexpectedly stumbled in the three months to October 2025, contracting by 0.1%, defying forecasts that had expected modest expansion and underscoring fresh concerns about the nation’s economic direction. Official figures from the UK’s statistics authority showed output dipped instead of growing, as analysts had predicted a 0.1% rise — a surprising turn that highlights weakening momentum in Europe’s fifth-largest economy.
October’s data reveal that the economy has now failed to grow for several months running, with no expansion since mid-year. On a monthly basis, GDP also slipped by 0.1% in October, following a similar drop in September and zero growth in August, illustrating how fragile activity has become amid broader uncertainty. The decline was driven by notable setbacks within key parts of the UK’s economic engine: the services sector — traditionally the backbone of British output — showed stagnation, while construction activity and some industrial components also weakened.
Economists and market watchers have zeroed in on several contributory factors, including softer consumer spending and cautious corporate investment as firms awaited the outcome of the Autumn Budget delivered by Chancellor Rachel Reeves on Nov. 26. Businesses in sectors such as wholesale trade, motor vehicle repair and scientific research reported subdued demand, a trend that the Office for National Statistics noted was continuing.
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Manufacturing saw a modest rebound in some areas following the reopening of car plants affected by a recent cyberattack, but this was not enough to offset weakness elsewhere. Construction output fell back, while services barely showed any growth, and overall output for the latest three-month period remained negative.
Financial markets reacted quickly to the readings: the British pound dipped against major currencies as investors reassessed expectations for monetary policy, while traders raised bets that the Bank of England will cut interest rates when it meets later this month. According to recent pricing, markets currently assign a high probability — around 90% — to a rate reduction in December, as policymakers seek to cushion the slowdown.
The unexpected contraction adds pressure on policymakers and the government to spur growth, especially as public debate intensifies over taxation, spending, and long-term strategies to revitalise the labour market and investment climate. With economic headwinds persisting, the UK stands at a delicate juncture — balancing fiscal responsibility with the need to support growth and confidence.
