UK economy shrinks as firms face additional cost pressures – Chamber

The UK economy shrank for the second month in a row during October, new figures reveal today.

And business leaders say the unexpected decline highlights the scale of the challenge facing the Government to revitalise economic growth.

The Office for National Statistics (ONS) said output fell 0.1 per cent during October, covering the month ahead of the Government’s first Budget.

This followed a 0.1 per cent decline recorded for the previous month.

The figures showed zero growth in the powerhouse services sector, with manufacturing and construction declining at a pace of 0.6 per cent and 0.4 per cent respectively.

Economists had expected a positive headline figure.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “This morning's unexpected fall in GDP reinforces the challenges the Government has faced in attempting to revitalise growth.

"Given the fact these results cover the start of Autumn, this uncertainty is only likely to become magnified as a result of the measures announce in the Autumn Budget.

“Early analysis from our Quarterly Business Report reveals the additional cost pressures firms are facing as a result of measures introduced in the Budget which is likely to have a knock-on impact on hiring levels.

“The Government will need to work closely with the business community to create a platform to encourage investment and entrepreneurialism to flourish.

“They will need to use the proposed Industrial Strategy to bolster confidence and also tackle the long-term structural challenges around business rates and VAT to reduce cost pressures and unlock growth.”

UK economy shrinks as firms face additional cost pressures – Chamber