LONDON: Britain’s FTSE 100 fell on Friday after data showed a surprise contraction in the country’s gross domestic product in October.
The FTSE 100 was down 0.1%, but eked out gains for a fourth week, while the midcap FTSE 250 lost 0.3% to log its first weekly loss in four, declining 0.5% in the week.
Britain’s economy shrank for a second month in a row in October in the run-up to the government’s first budget - the first back-to-back declines in output since the onset of the COVID-19 pandemic in early 2020.
Gross domestic product contracted by 0.1% month-on-month in October, as it did in September. Economists polled by Reuters had forecast a monthly expansion of 0.1%.
Finance Minister Rachel Reeves’ budget statement on Oct. 30 - whose direct impact will be felt in GDP data from November onwards - imposed large tax increases on businesses.
The pound weakened against the US dollar after data showed growth surprisingly stalled in October.
The Bank of England is expected to hold rates at its policy decision next week. However, the data could prompt traders to attach a greater chance of speedier rate cuts next year. Investors will also watch for an expected rate cut from the US Federal Reserve.
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