The possibility of a rate cut by the Bank of England has increased, as UK GDP unexpectedly declined.

In a report, Capital Economics economist Ruth Gregory said that the unexpected contraction of the UK economy in October has strengthened the case for the Bank of England to cut interest rates next week. She said that despite a rebound and mild growth in manufacturing output in October following a cyber attack on Jaguar Land Rover in September, the overall economic decline of 0.1% in October is particularly disappointing. "It is worth noting that in the past seven months, the country's economy has only grown in one month," Gregory said. She added that the country's economy is not any bigger than it was at the beginning of the second quarter, and manufacturing output is not higher than the mid-2023 levels. This weakness, combined with a slowdown in the labor market and a decrease in inflation, has bolstered confidence that the Bank of England will cut interest rates by 25 basis points on December 18th.