The UK economy is going through a tough period. Its gross domestic product unexpectedly contracted, marking two consecutive months of negative growth for the first time since 2020.

According to data from the Office for National Statistics, the UK economy suffered a significant setback in October, largely due to business and consumer uncertainty. This came just before the newly elected government's budget announcement.

The ONS reported a 0.1% monthly decline in GDP for the period. Analysts attribute the downturn to lower production levels. Economists polled by Reuters had expected a 0.1% expansion for October, but the actual figure was the opposite. Instead, the UK economy faced a second consecutive contraction, following a similar decline in September. This was the first time since 2020 that the UK had experienced such back-to-back declines. As a result, real GDP grew by just 0.1% over the past three months.

Weighed down by gloomy statistics, the British pound slid, briefly hitting a new of 1.2619. The pound/dollar pair later pared some losses to stabilize around the 1.2662 level, down 0.06%.

British finance minister Rachel Reeves called the October data "disappointing." At the same time, she expressed support for the government's controversial economic strategies. "While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth," Reeves said, citing measures such as capping corporation tax and implementing a decade-long infrastructure plan as key components that could spur economic expansion.

Earlier, in late October, the finance minister unveiled the government's budget, which included £40 billion ($50.5 billion) in tax increases. Reeves added that this plan would be achieved through the implementation of new policy measures.