Drop in GDP underlines economic fragility – Chamber

A larger than expected drop in GDP during October reflects the fragile nature of the UK economy, business leaders said today.

The economy shrank by 0.3 per cent in October, as higher interest rates squeezed consumers and bad weather swept the country.

It followed growth of 0.2 per cent in September.

Retail and tourism were hit by severe weather in October as the UK felt the effects of Storm Babet.

Many economists had predicted the economy would fall by just 0.1 per cent, but the services, manufacturing and construction sectors all contracted.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “This morning's GDP results underline the fragile nature of the economy as growth flatlined last quarter and fell in October more sharply than expected.

“Activity fell across all sectors with the bad weather having an impact on consumer spending and of course, higher borrowing costs continue to act as a drag on investment - a theme which we have repeatedly encountered as part of our research on the Business Commission West Midlands.

“All eyes will now turn to tomorrow's MPC meeting to see how the Bank of England respond with many city analysts expecting rates to be held until the latter part of next year.

“With this in mind, the Government needs to ensure its focus on reducing cost pressures for businesses and unlocking investment remains front and centre of their agenda for growth as we head into 2024.”

Find out more about Business Commission West Midlands, a group formed by three West Midlands Chambers of Commerce to provide a roadmap for unlocking business growth across the region.