“This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.”
Britain’s economy shrank in October, marking the second consecutive month of contraction under Labour’s leadership, according to newly released figures from the Office for National Statistics (ONS).
It is the first time the economy has contracted for two consecutive months since the Covid-19 pandemic.
The data revealed that Gross Domestic Product (GDP) fell by 0.1% in October, following a similar decline in September, as the UK’s economic momentum slowed sharply after recording the strongest growth in the G7 earlier this year.
The October contraction coincided with Labour’s first 100 days in office, adding to growing concerns about the government’s handling of the economy. While the Prime Minister, Keir Starmer, entered Downing Street with promises of rapid growth and economic renewal, he has since reverted on several manifesto pledges, including his pre-election vow to maintain the highest growth in the G7 by the next election.
Disappointing Start for Reeves as Chancellor
Chancellor Rachel Reeves attempted to downplay the figures, stating: “While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth.” However, critics have pointed to a series of missteps, including sweeping tax rises in Labour’s first Budget, which businesses warn will stifle growth further.
Treasury spokesperson Daisy Cooper criticised the government’s approach, particularly the burden placed on small businesses. “This unexpected fall in GDP shows why it’s so disappointing that the Budget missed so many opportunities and made so many self-defeating decisions,” she said. “Small businesses are the engine of our economy and drive growth. Yet this government has decided to burden them with more costs.”
“This unexpected fall in GDP shows why it’s so disappointing that the Budget missed so many opportunities and made so many self-defeating decisions.”
Economy “Ground to a Halt” Under Labour
ONS Director of Economic Statistics Liz McKeown noted that October’s decline was driven by weak performances across key sectors. “Oil and gas extraction, pubs and restaurants, and retail all had weak months,” she said, though she added that growth in telecoms, logistics, and legal firms helped partially offset the losses.
Britain’s dominant services sector, which accounts for around 80% of the economy, showed no growth, while the production and construction industries both contracted. Analysts had forecast modest growth of 0.1% for October, making the downturn an unexpected blow for Labour’s economic strategy.
Business Confidence Falters
GDP data for the third quarter of the year also came in below expectations, and Labour’s National Insurance Contributions (NICs) hike on small businesses has drawn sharp criticism from industry leaders. Shadow Chancellor Mel Stride warned that declining growth figures will impact households directly.
“The impact of these decisions will be felt by families through higher taxes, fewer jobs, higher prices, and higher interest rates,” he said. “It is no wonder businesses are sounding the alarm. This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.”
Bleak Outlook
With the UK economy now teetering on the brink of a potential recession, Labour faces mounting pressure to stabilise growth. Business leaders and opposition MPs alike are calling for urgent action, including reversing tax hikes and providing targeted support for small businesses.
As the government approaches its next Budget, all eyes will be on Chancellor Reeves and Prime Minister Starmer to see if they can reverse the downturn—or if the early cracks in Labour’s economic leadership will widen further.
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