Economy grows by just 0.4% in October

Growth was slowing even before new lockdown measures were introduced, according to the ONS.

UK economic growth slowed in October even before the national lockdown measures were introduced in England, Office for National Statistics (ONS) figures show.

The ONS estimates that UK gross domestic product (GDP) grew just 0.4% in October, down from 1.1% in September.

It is the sixth consecutive month of economic growth since a record fall of 19.5% at the height of the pandemic in April.

However, the economy still remains 7.9% below levels seen before the coronavirus outbreak in February 2020.

The figures show manufacturing made the largest single contribution to GDP, with output up 0.16%.

Production grew by 1.3%, construction by 1% and the services sector by 0.2%.

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The accommodation and food services sector was the largest drag, posting a decline of 0.37%.

The figures represent the period before the second national lockdown was introduced in England on 5 November.

The ONS coronavirus business impact survey has, however, provided an early indication of the impact of the latest lockdowns.

Almost half of firms reported their turnover fell during the first two weeks of November below normal monthly averages. This compares with 50% reporting decreases at the end of October.

Commentators say the next round of GDP data will show the damage done by further lockdowns and there are warnings that uncertainty over a Brexit deal could also derail any economic recovery. 

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Derrick Dunne, chief executive at Beaufort Investment, says: “While there has been some good news around the vaccine and restrictions easing, we simply haven't seen the true scale of the economic damage being wrought by coronavirus, lockdowns and now sweeping job cuts. 

“We also cannot ignore the fact that the impact on sectors such as travel and real estate will be much longer lasting than other sectors as many peoples’ fundamental way of life looks set to change.

"The Organisation for Economic Co-operation and Development warned earlier this month that the UK faces a double threat from both Covid-19 and then Brexit, and so for investors that immediate outlook remains unchanged.”

Dunne adds that it is important for investors to remain calm to meet their long-term goals.