# UK economy almost flat-lined in October, adding to rate hike doubts
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-12-10
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: UK Economy Growth Disappoints: Impact of Omicron Variant
Meta Description: October GDP up by 0.1% below expectations. Concerns rise about BoE rate hike. CBI calls for consistency in COVID measures. Supply chain issues affect recovery.
URL: https://financedigest.com/uk-economy-almost-flat-lined-in-october-adding-to-rate-hike-doubtshtml

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LONDON (Reuters) – Britain’s economy barely grew in October, before the emergence of the new Omicron variant of the coronavirus, further denting expectations that the Bank of England will raise interest rates next week for the first time since the pandemic struck.

Gross domestic product edged up by a weaker-than-expected 0.1% in October.

That meant the economy remained 0.5% smaller than it was in February 2020, just before the country went into its first COVID-19 lockdown, the Office for National Statistics said on Friday.

Economists [polled by Reuters](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") had forecast monthly gross domestic product growth of 0.4% from September.

Growth disappointed in October, reinforcing [concerns about the resilience of the UK’s economic](https://www.financedigest.com/oil-falls-on-concerns-economic-slowdown-may-dent-fuel-demand.html "Oil falls on concerns economic slowdown may dent fuel demand") recovery to the Omicron variant and the impact of further restrictions,” Alpesh Paleja, lead economist at the Confederation of British Industry, said.

We need to create consistency in our approach and build confidence by reducing the oscillation between normal [life and restrictions as we learn to live](https://www.financedigest.com/how-to-live-an-extraordinary-life.html "How to Live an Extraordinary Life") with the virus and its variants.

Sterling dipped after the ONS figures were published as investors took them as another sign that a BoE [rate hike](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike") on Dec. 16, after its December meeting, was unlikely.

Britain’s [economy bounced back strongly earlier this year from its nearly 10% slump in 2020 when the pandemic hit](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF").

But the rebound slowed in recent months as supply chain problems hit [manufacturers and it is expected to lose](https://www.financedigest.com/why-manufacturers-mustnt-lose-their-green-focus-in-troubled-times.html "WHY MANUFACTURERS MUSTN’T LOSE THEIR GREEN FOCUS IN TROUBLED TIMES") more momentum due to new COVID-19 rules to slow the spread of the Omicron variant of the coronavirus.

October’s growth was helped by a continued [rise in face-to-face appointments at doctors’ surgeries in England which had fallen sharply during the coronavirus pandemic, contributing to a 0.4% rise in output in Britain’s](https://www.financedigest.com/influence-of-the-rise-of-machinery-on-britains-workforce.html "INFLUENCE OF THE RISE OF MACHINERY ON BRITAIN’S WORKFORCE") dominant services sector.

By contrast, industrial output fell 0.6%, [hit by big falls](https://www.financedigest.com/julius-baer-2022-profits-fall-as-it-hits-business-cycle-targets.html "Julius Baer 2022 profits fall as it hits business cycle targets") in electricity and gas and in mining and quarrying.

The manufacturing sector flat-lined as the sector struggled with [supply chain](https://www.financedigest.com/ge-shares-slump-as-supply-chain-inflationary-woes-threaten-profit-outlook.html "GE shares slump as supply chain, inflationary woes threaten profit outlook") problems and staff shortages.

Construction fell by the most since April 2020, down by 1.8% from September, also [hit by a shortage](https://www.financedigest.com/nintendo-says-chip-shortage-hitting-hardware-development.html "Nintendo says chip shortage hitting hardware development") of supplies.

Separately, the ONS released trade [data which showed Britain’s](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") goods trade deficit narrowed to 13.9 billion pounds in October from 14.7 billion pounds in September.

(Writing by William Schomberg and Andy Bruce)


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