UK economy shrank by 0.1% in October

The UK economy shrank by 0.1% in October 2025, according to figures published today, marking the second consecutive monthly fall and extending a period of stalled growth.

Data covering the three months to October show real gross domestic product (GDP) down 0.1% compared with the three months to July. This followed growth of 0.1% in the three months to September and 0.2% in the three months to August, making it the first three-month contraction in GDP since December 2023.

The Office for National Statistics (ONS) said the slowdown was driven by weakness across most major sectors. Production output fell by 0.5% over the three-month period, matching the decline seen in the three months to September. The fall was largely due to a sharp drop in the manufacture of motor vehicles, trailers and semi-trailers, which declined by 17.7% and made the largest negative contribution to GDP.

Construction output also fell, down 0.3% in the three months to October, reversing growth of 0.1% in the previous period. Services output, which accounts for the bulk of economic activity, showed no growth, continuing a trend of slowing expansion seen since March 2025.

On a monthly basis, GDP fell by 0.1% in October, following a 0.1% decline in September and flat growth in August. Services output dropped by 0.3% and construction by 0.6% during the month, while production rose by 1.1%.

Within production, car manufacturing showed a partial recovery in October, with output rising 9.5% compared with September. However, activity remained 21.8% lower than in August, when a cyber-attack forced Jaguar Land Rover to temporarily halt production.

Liz McKeown, ONS director of economic statistics, said: “Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month.”

The ONS noted that businesses across production, construction and services reported delaying activity ahead of the Autumn Budget, amid uncertainty over potential policy changes. Economists had largely expected GDP to rise by 0.1% in October, anticipating a stronger rebound in manufacturing.

The latest figures are likely to reinforce expectations that the Bank of England will cut interest rates when it meets next week, with markets pricing in a quarter-point reduction that would take the headline rate below 4% for the first time since January 2023. Further cuts could follow in early 2026 if weak growth persists and inflation continues to ease, as forecast by both the Bank and the Office for Budget Responsibility.

“A small dip in growth in October underlines a simple truth: even in the face of relentless speculation and negativity ahead of the Autumn Budget, SMEs kept pushing forward,” he said. “But that determination can only stretch so far before margins become unsustainable.”