Britain's Economic Downturn Ahead of Key Budget

Britain's economy contracted in October, marking the first consecutive GDP declines since the pandemic's onset. New finance minister Rachel Reeves' upcoming budget, which includes tax rises, has sparked concerns. The services sector stagnated, and manufacturing and construction declined, reflecting pre-budget economic uncertainty.

Britain's economy contracted for the second consecutive month in October, ahead of the crucial government budget presentation. This back-to-back decline marks the first such instance since the COVID-19 pandemic's beginning, posing a challenge for newly appointed Finance Minister Rachel Reeves.

The Office for National Statistics reported a 0.1% month-on-month contraction in GDP for both September and October, reflecting economic volatility reminiscent of the early pandemic lockdowns. Moreover, economists had predicted slight growth, highlighting the unexpected nature of the decline as businesses anticipated budget-induced tax hikes.

This economic dip comes amid warnings by Reeves and Prime Minister Keir Starmer about necessary tax increases, drawing criticism from Conservative Party representatives. While consumer confidence saw a modest uplift in December, the overall growth outlook remains cautious with long-term plans aimed at recovery.

(With inputs from agencies.)