London, Dec. 15, 2025 – The UK economy shrank by 0.1 per cent in October, in a slowdown that analysts and the UK statistics agency linked to concerns about Rachel Reeves’ tax-raising Budget.
The figures published on Friday compare with the 0.1 per cent expansion forecast by economists polled by Reuters and underscore the challenges facing the country’s Labour government.
The contraction on the previous month is bad news for Reeves, who has faced heavy criticism from MPs over months of confidence-sapping leaks and speculation that preceded her Budget on November 26.
Sir Mel Stride, Conservative shadow chancellor, described the fall in output as “extremely concerning” and “a direct result of Labour’s economic mismanagement”.
Although the government says growth is its priority, the UK economy has expanded in only one of the past seven months and is now no bigger than in May.
The Office for National Statistics, which issued the October figures, said that survey responses indicated that “businesses across the production, construction and services sectors” — ranging from computer programmers to real estate firms and employment agencies — had spent the month waiting for the outcome of the Budget.
It also noted the continuing impact of a cyber-attack that hit production at Jaguar Land Rover.
Lindsay James, investment strategist at Quilter, added that “much” of the fall in output shown in Friday’s figures “can be put down to the Budget and the deterioration in consumer confidence, spending and business planning”.
Reeves, who said this week that she did not authorise pre-Budget leaks, ultimately announced £26bn in tax rises.
The overall tax burden is now expected to reach a record 38 per cent of GDP by the end of the parliament in 2029. James said Friday’s GDP figures made a Bank of England interest rate cut next week “increasingly likely . . . but with inflation remaining persistently high, the pace at which subsequent cuts can be delivered remains questionable.” (Financial Times)
