The Office for National Statistics’ (ONS) latest official figures for October show that the economy shrank for the second month in a row, while pay growth increased for the first time in more than a year.
GDP falls for second month
The official figures show that Gross Domestic Product (GDP) – often used as a measure of the economy as a whole – fell by 0.1% in October. This follows a similar reduction in September of 0.1%.
The quarter to October shows a 0.1% increase when compared with the three months to July 2024.
The results are therefore mixed but suggest there’s been a dip in recent months. This may be related to businesses waiting to see what the Autumn Budget would hold. However, the dip could continue as businesses remain concerned about the effects of the National Insurance increases revealed in the Budget.
Pay growth at 5.2%
Official figures also show that wages have grown at an annual rate of 5.2% between August and October, meaning that wages are growing faster than prices.
The data released by ONS also suggests that job vacancies are falling, however the unemployment rate remains unchanged at 4.3%.
Impact on Bank of England base rate
The Bank of England met last Thursday to review the base rate. They consider various figures on the economy in arriving at their decision.
With inflation also increasing to 2.6% in November, the Bank voted to hold the base rate at 4.75%.
Mixed signals
The UK economy shows mixed signals with figures suggesting a slowdown in economic activity. However, wage growth could support household spending but may fuel inflationary pressures. Figures also suggest that the labour market is holding steady for now. This combination points to a cautiously balanced economy, where businesses may face tightening conditions.
HMRC have proposed a new criminal offence for making reckless, untrue statements or declarations about what's known as 'direct taxes' - Income Tax, National Insurance and the like. For Customs and Excise and VAT ('indirect taxes'), it is already possible to prosecute individuals who make untrue statements or submit incorrect documents either knowingly or recklessly, without the need to prove dishonesty. The penalties for such offences can be severe, including substantial fines and imprisonment. The direct tax regime does not currently contain an equivalent offence.
A new Freedom of Information (FOI) request has discovered that health and safety violations cost British employers over £44 million per year. The Health and Safety Executive (HSE) revealed that serious breaches have resulted in an increasing number of prosecutions between 2023 and 2025.