UK growth ‘slows to a crawl’ as GDP rises just 0.1% in October – business live | Business

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The UK economy came to a near-standstill in October, raising concerns that the recovery has faltered just as new restrictions are introduced to combat Omicron.

Data just released shows that GDP grew by just 0.1% in October, much weaker than the 0.4% which economists had expected, as firms struggled with supply chain problems and staff shortages.


UK GDP Photograph: ONS

It leaves the economy still 0.5% below its pre-pandemic levels in February 2020.

The Office for National Statistics reports that services output grew by 0.4% in October 2021, partly driven by human health activities due to a rise in face-to-face appointments at GP surgeries in England.

Services output overall has now reached its pre-coronavirus pandemic levels.

But other parts of the economy shrank during the month.

Production output decreased by 0.6% in October, with electricity and gas down by 2.9%, and mining and quarrying down by 5.0%.

And construction contracted, with output down by 1.8% in the month.

Michael Hewson 🇬🇧

Disappointing UK GDP data for October. The economy grew 0.1%, below expectations of 0.4%.
The main drag was big falls in industrial production and construction output which fell 0.6%, and 1.8% respectively. Index of services rose 0.4% which was in line with expectations. #gbp

December 10, 2021

Office for National Statistics (ONS)

GDP grew 0.1% in October and is 0.5% below its pre-pandemic (Feb 2020) peak:

▪️ services grew 0.4% and are back to their pre-pandemic peak
▪️ manufacturing was flat (2.5% below pre-pandemic peak)
▪️ construction fell 1.8% (2.8% below pre-pandemic peak)


December 10, 2021

More details and reaction to follow….

Also coming up today

Inflation in America is expected to hit a new 30-year high today, putting more pressure on the Federal Reserve to end its stimulus programme faster.

The cost of living is forecast to have surged by around 6.8% per year in November, beating the 6.2% seen in October, and the fastest pace since the early 1980s.

Michael Hewson of CMC Markets says:

With the Federal Reserve due to meet next week, there is some concern that a really hot number today could prompt the FOMC to go accelerate its tapering program more rapidly, from the current $10bn of US treasuries and $5bn of mortgage-backed securities that it started last month, in an attempt to give themselves more optionality in 2022 when it comes to raising rates.

Currently markets are pricing the prospect of a doubling of the taper next week, and any number that hints at a bigger amount next week could prompt some choppiness.

Michael Hewson 🇬🇧

US CPI could turn up the heat on the Fed next week @CMCMarkets

December 10, 2021

The fate of one of the UK’s oldest and largest mutual insurers will be decided on Friday as LV= members cast their ballots on a controversial takeover by US private equity firm Bain Capital.

LV=’s leadership insists that the £530m deal is in its members’ best interests and will secure much-need capital. But, members, campaigners and politicians fear transferring power to an American private equity firm will put an emphasis on short-term profits, at the expense of customer service and returns for members.

The agenda

  • 7am GMT: UK GDP report for October
  • 7am GMT: UK trade balance for October
  • 9.30am GMT: Bank of England/Kantar survey of UK inflation attitudes
  • 1.30pm GMT: US inflation report for November
  • 3pm GMT: University of Michigan survey of US consumer confidence

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