Britain’s economy unexpectedly contracted again in October, official data showed Friday, dealing a blow to the Labour government’s hopes of reviving economic growth.
Gross domestic product fell 0.1 percent in October following a contraction of 0.1 percent in September, the Office for National Statistics said in a statement.
Analysts had forecast growth of 0.1 percent.
Manufacturing rebounded in the month as carmaker Jaguar Land Rover resumed operations after a cyberattack that had weighed on the UK economy in September.
But analysts noted that businesses and consumers reined in spending ahead of Britain’s highly-expected annual budget.
“Business and consumers were braced for tax hikes and the endless speculation and leaks have once again put a brake on the UK economy,” said Lindsay James, investment manager at Quilter.
Prime Minister Keir Starmer’s Labour party raised taxes in last month’s budget to slash state debt and fund public services.
At the same time, Britain’s economic growth was downgraded from next year until the end of 2029, according to data released alongside the budget.
In her first budget last year, finance minister Rachel Reeves increased corporate taxes, a move that is widely held responsible for the UK’s slow economic growth and rising unemployment.
In November, she made a comeback with new rises that targeted employees.
The statistics released on Friday, according to analysts, increased the likelihood that the Bank of England will lower interest rates the following week.
