UK economy shrinks as BoE readies new rates decision - ONS

Credit: REUTERS/SUSANNAH IRELAND

Recasts, adds details and background throughout

LONDON, Dec 13 (Reuters) - Britain's economy shrank in October, official data showed on Wednesday, a day before the Bank of England is expected to keep interest rates at a 15-year high to curb still-high inflation despite the toll they are taking on growth.

Gross domestic product (GDP) fell by 0.3% from September, the Office for National Statistics said.

A Reuters poll of economists had pointed to no change in GDP.

It was the first time since July that GDP had shrunk on a month-by-month basis.

In the three months to October, GDP flat-lined, the ONS said, weaker than the Reuters poll forecast of a 0.1% increase.

Britain's economy avoided a contraction in the July-to-September period - when it also showed no change - but some analysts think it remains at risk of a shallow recession in late 2023 and early 2024 after the BoE's increases in interest rates.

The central bank is widely expected to keep Bank Rate at 5.25% on Thursday and signal once again that it is not close to cutting them.

The ONS data on Wednesday showed Britain's dominant services sector shrank by 0.2% in October while manufacturing and construction contracted by 1.1% and 0.5% respectively.

(Reporting by William Schomberg; Editing by Kate Holton and Andy Bruce)

((william.schomberg@thomsonreuters.com; +44 207 542 7778; Reuters Messaging: william.schomberg.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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