Britain’s economy shrinks as BoE readies new rates decision – ONS

FILE PHOTO: People shop on Oxford Street in London, Britain April 10, 2023. REUTERS/Anna Gordon/File Photo

LONDON  -Britain’s economy shrank in October, official data showed on Wednesday, a day before the Bank of England is expected to keep interest rates at a 15-year high to curb still-high inflation despite the toll they are taking on growth.

Gross domestic product (GDP) fell by 0.3 percent from September, the Office for National Statistics said.

A Reuters poll of economists had pointed to no change in GDP.

It was the first time since July that GDP had shrunk on a month-by-month basis.

In the three months to October, GDP flat-lined, the ONS said, weaker than the Reuters poll forecast of a 0.1 percent increase.

Britain’s economy avoided a contraction in the July-to-September period – when it also showed no change – but some analysts think it remains at risk of a shallow recession in late 2023 and early 2024 after the BoE’s increases in interest rates.

READ: Sluggish UK economy staged partial bounceback in August

The central bank is widely expected to keep Bank Rate at 5.25 percent on Thursday and signal once again that it is not close to cutting them.

READ: Bank of England keep rates at 15-year high, rules out quick cuts

The ONS data on Wednesday showed Britain’s dominant services sector shrank by 0.2 percent in October while manufacturing and construction contracted by 1.1 percent and 0.5 percent respectively.