UK Economy Contracts in October with Notable Drop in Vehicle Manufacturing Due to Jaguar Land Rover Cyber-Attack
The UK's GDP fell by 0.1% in October, contrary to economists' expectations of 0.1% growth. Over the three months leading to October, GDP also declined by 0.1%, driven by a 0.5% drop in production and a substantial 17.7% reduction in vehicle manufacturing. This sharp decline in vehicle manufacturing was primarily caused by a cyber-attack on Jaguar Land Rover, which resulted in a shutdown in September and only a partial recovery in October. Despite monthly production output increasing by 1.1% month-on-month in October due to the resumption of vehicle manufacturing, levels remained below those seen in August.
The services sector, which comprises approximately three-quarters of the economy, showed no growth over the same three-month period. Analysts note that monthly GDP figures tend to be more volatile than the three-month rolling measure, which better reflects the underlying economic trend. The weak data have strengthened the case for a forthcoming Bank of England interest rate cut.
The Treasury has highlighted energy-bill relief and significant infrastructure investments as measures to support economic growth. However, economists from Capital Economics and Barclays interpret the contraction as evidence of a weak economy, with ongoing uncertainty around the Budget impacting consumer and business spending.
