(Updated with comments from economists, details and context)
by William Schomberg and Andy Bruce
LONDON, Dec 13 (Reuters) – The British economy contracted unexpectedly in October, which is expected to pose a new headache for the Bank of England (BoE), still opposed to a rapid cut in interest rates. interest, currently at its highest level in 15 years.
According to data published Wednesday by the National Statistics Office (ONS), gross domestic product (GDP) fell by 0.3% after an increase of 0.2% the previous month.
Economists polled by Reuters on average forecast stagnation (+0.0%).
This is the first time since July that GDP has contracted from one month to the next.
On the foreign exchange market, around 09:00 GMT, the pound sterling fell by
0.25
%, has
1.25315
dollar. It was at $1.2549 before the publication of this statistic.
Compared to October 2022, however, GDP increased by 0.3%, compared to a consensus of 0.6% and an increase of 1.3% the previous month.
In the three months to October, GDP stagnated, according to the ONS, while the Reuters consensus had forecast an increase of 0.1%.
The UK economy avoided a contraction in the July-September period, but some analysts say it remains under threat of a mild recession at the end of the year and early 2024 due to high interest rates. the BoE.
As the BoE meets on Thursday, investors expect the central bank to keep its main key rate at 5.25% and signal once again that it is not about to cut it, despite the developments current situation.
Paul Dales, chief UK economist at Capital Economics, said October’s GDP data suggests Britain could be in recession.
“(Despite this), the Bank of England is likely to resist the idea of lowering rates in the short term,” he predicts. (Reporting William Schomberg, French version Claude Chendjou, editing by Kate Entringer)
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