New Delhi

Britain's economy contracted for the second consecutive month in October, according to official data from the Office for National Statistics.

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Gross domestic product fell by 0.1 per cent in October, matching the 0.1 per cent decline recorded in September.

The decline puts the UK on recession watch, marking the first back-to-back monthly contraction since the covid lockdowns in 2020.

Weak performance in oil and gas extraction, retail, pubs, and restaurants weighed on overall output, despite slight gains in telecoms and logistics.

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The contraction poses a challenge for the labour government, which marked its first 100 days in office.

Finance minister Rachel Reeves described the figures as 'disappointing' but emphasized policies aimed at long-term growth. She said and I quote,

"The numbers on GDP are disappointing, but it's not possible to turn around more than a decade of poor economic growth and stagnant living standards in just a few months. But you'll see from the plans we've been announcing - whether that is the energy reforms we've published today, the reforms to build one and a half million homes that we published yesterday, the pensions reforms, the creation of a national wealth fund - this government are getting on with the job in improving economic growth and driving up living standards."

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The government’s October budget introduced significant tax hikes for businesses and higher borrowing for infrastructure investments.

However, the anticipation of these 'tough' measures is seen as dampening business sentiment, with households and companies delaying spending, hiring, and investment.

The services sector showed no growth in october, while production and construction both shrank.

Amid weak growth, analysts warn that Britain may already be experiencing a recession, with output per head declining for the second consecutive quarter.

The Bank of England, which cut interest rates by 25 basis points in November to 4.75 per cent, faces another critical decision on rates next week.

Prime Minister Keir Starmer’s earlier pledge to achieve the highest economic growth in the G7 has been downgraded to an 'aim.'

With GDP growth stalling, uncertainty over fiscal policies and rising taxes continue to cloud the UK’s economic outlook.

(With inputs from the agencies)