Higher interest rates and bad weather blamed for shrinking economy

The UK’s economy shrank by more than expected in October, with higher interest rates and bad weather restricting growth, according to the latest figures published today.

Gross domestic product (GDP) dropped by 0.3% on the month, compared with a growth of 0.2% in September.

Household spending has been hit by rate rises as the Bank of England tries to bring down inflation. It will be making its next rate decision on Thursday.

Meanwhile, both the construction and tourism sectors suffered from wet weather last month as Storm Babet lashed the UK.

Most economists had forecast that the economy would decline by only 0.1% in October. Darren Morgan, of The Office for National Statistics, said: “Services were the biggest driver of the fall with drops in IT, legal firms and film production – which fell back after a couple of strong months.

“These were also compounded by widespread falls in manufacturing and construction, which fell partly due to the poor weather, such as the severe winds and flooding seen during Storm Babet.”