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The economy remained in reverse gear during October, according to official figures covering the month ahead of the government’s first budget.

The Office for National Statistics (ONS) said output fell 0.1% following the 0.1% decline recorded for the previous month.

It marked the first time since the COVID pandemic that the economy had shrunk for two consecutive months.

The figures showed zero growth in the powerhouse services sector, with manufacturing and construction declining at a pace of 0.6% and 0.4% respectively.

Economists had expected a positive headline figure.

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The data adds to the picture of a far more jittery economy during the second half of the year, in the wake of the general election.

Critics blame the government, accusing Sir Keir Starmer and his chancellor Rachel Reeves of a spectacular, early, own goal that spooked the public and businesses alike.

After three weeks in office, both warned of a “tough” budget to come on 30 October due to an inherited “£22bn black hole” in the public finances that a snap Treasury review had uncovered.

There has been strong evidence since then of a hit to sentiment as a result of the warning in data covering things like consumer spending and wage awards.

SLOWING ECONOMY MAY BOLSTER PACE OF RATE CUTS



Gurpreet Narwan

Business and economics correspondent

@gurpreetnarwan

The economy is now 0.1% smaller than it was before Labour came to power.

It’s been almost six months but the new government is yet to deliver on its promise to turbocharge economic growth.

The chancellor will today urge the public to be patient with her. The message will be: It will take a lot longer than six months to revive an economy that has been stagnating for a decade.

How confident should we be in her plan? On the one hand, falling inflation and interest rates should provide a more fertile environment for consumer spending and business investment.

The government’s plan to increase public investment should also boost demand in the economy and, if successful, lead to longer term sustained growth.

Yet, there are a number of risks. A big increase in business taxes next year will weigh on employment and growth.

Pubs, restaurants and retailers are already stagnating and that was before they reacted to the budget, which at the end of the month slapped them with a big increase in employers’ national insurance contributions..

The latest figures show output in consumer-facing services fell by 0.6% in October 2024, following growth of 0.4% in September 2024. Manufacturing also shrank by 0.6% as, across the economy, businesses went in ‘wait and see’ mode ahead of the budget. The risk is they didn’t like what they saw in the budget.

Then there is Trump and the risk of tariffs. Britain could escape the worst of the cross hairs but we will have to wait and see. If things go against us, it’s very possible that the Bank of England could soon start worrying more about weak growth than inflation, possibly a prelude – as we’ve seen in Europe – to a faster pace of interest rate cuts.

The economy, which had been the fastest-growing in the G7 between January and June, grew by 0.1% during the third quarter of the year.

Economists had been expecting a similar performance in the final three months of 2024 following a budget that largely spared working people additional pain but put businesses and those of wealthier means on the hook for extra taxes.

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CBI chief’s approach to budget tax shock

Business has since accused the chancellor of hurting the very working people she wants to protect as measures, such as higher employer National Insurance contributions, will only lead to weaker pay growth, fewer jobs and higher prices as additional costs are passed on.

Employers also argue that the extra tax burden, along with tougher employee rights legislation, will hurt investment at a time when Labour has prioritised growth in the economy.

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HMV owner slams budget ‘burden’

Ms Reeves said the figures were “disappointing”, but defended the budget.

She said: “We have put public finances back on a stable footing, capped the rate of corporation tax at the lowest level in the G7, established a £70bn National Wealth Fund to drive growth in our towns and cities, launched a 10-year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.”

The chancellor added: “We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere.”

Mel Stride, the shadow chancellor, said: “It is no wonder businesses are sounding the alarm.

“This fall in growth shows the stark impact of the chancellor’s decisions and continually talking down the economy.”

He went on to say that Labour was left “the fastest growing economy in the G7”, adding: “Because of their decisions, growth is now under serious pressure.

“The impact will be felt by families through higher taxes, fewer jobs, higher prices and higher interest rates.”

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The government has shifted the growth emphasis to the public sector through a jump in investment in services such as the NHS.

Ms Reeves is borrowing more to help fund that and insists the budget was a one-off to help fix pressing problems that were unfunded by her predecessor.

The Bank of England has said that the reaction of business to the budget tax hikes is its main area of concern when judging the prospects for inflation and economic growth.

Financial markets are expecting four interest rate cuts next year but no change when policymakers meet for the final time in 2024 next week.

Commenting on today’s figures Yael Selfin, chief economist at KPMG UK, said: “October activity was held back by uncertainty ahead of the budget, with consumer and business confidence near recent lows.

“The fourth quarter could see a weaker pace of growth, as businesses come to terms with the higher tax burden announced at the budget as well as rising geopolitical uncertainties.

“Nevertheless, we expect higher public spending to lift GDP growth next year, with lower interest rates providing some boost to private sector demand.”

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Police admit failures in Harry Dunn case after report finds officers prioritised suspect’s welfare

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Police admit failures in Harry Dunn case after report finds officers prioritised suspect's welfare

Northamptonshire Police has admitted it failed Harry Dunn and his family after a report found officers prioritised the welfare of the suspect in the case over the investigation.

The 19-year-old died in 2019 after US state department employee Anne Sacoolas – who was driving a car on the wrong side of the road – hit his motorbike near RAF Croughton in Northamptonshire.

However, Sacoolas was not immediately arrested following the crash and was able to flee the country, claiming diplomatic immunity, because police did not believe a “necessity test” had been met.

An independent report, published on Wednesday, has now criticised the force’s senior leadership for their handling of the case – including describing its former chief constable as having a “detrimental” impact.

Harry Dunn’s mother Charlotte Charles said she welcomed the findings.

She told Sky News: “Unfortunately, we were treated extremely poorly. All the authorities wanted to shut us down…

“This report does validate everything, of the way we felt and everything that we’ve been put through. To be treated as we were, as the victims of a serious crime, we were let down really, really badly.”

Following a long fight for justice by Mr Dunn’s family, Sacoolas eventually pleaded guilty to causing death by careless driving via video link at the Old Bailey in December 2022.

She later received an eight-month prison sentence, suspended for 12 months.

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From 2022: Anne Sacoolas pleads guilty

Following the report, Assistant Chief Constable Emma James said in a statement: “On behalf of Northamptonshire Police, I want to apologise to Harry’s family for what is now clear was a failure on our part to do the very best for the victim in this case, Harry, and his family who fought tirelessly in the years that followed to achieve justice for him.

“The picture which emerges is one of a force which has failed the family on a number of fronts”.

She also added: “It was vitally important that Northamptonshire Police conducted this review into the most high-profile case in the force’s history, a case where clear and significant shortcomings have now been properly and independently unearthed.”

Assistant Chief Constable Emma James
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Assistant Chief Constable Emma James

The report, which has 38 recommendations, found that Nick Adderley, who was sacked as head of the force last year after lying about his military record, had caused a breakdown in relations with Mr Dunn’s family.

It also revealed that his “erroneous statements” about Sacoolas’s immunity status led the Foreign Office to contact the force asking him not to repeat them.

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Danielle Stone, the Police, Fire and Crime Commissioner for Northamptonshire, said Mr Adderley’s behaviour was “unfathomable”.

She added that the report “makes really clear his culpability.”

Danielle Stone, the Police, Fire & Crime Commissioner for Northamptonshire
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Danielle Stone said Mr Adderley’s behaviour was “unfathomable”

The report also said Northamptonshire Police potentially had a culture of not arresting suspects “in circumstances such as these, which could lead to evidence not being obtained”. It recommended that the force adopt an “investigative mindset” over serious road crashes.

Regarding the decision not to arrest Sacoolas, the report said the decision had not been “explained in enough detail”. It added: “The overriding factor in the decision appears to be the welfare of the suspect and her suffering from shock, with little to no consideration around the full necessity test under the Police and Criminal Evidence Act.

“A prompt and effective investigation was not considered or articulated. The view is that in these circumstances the suspect could and should have been arrested to assist the evidence-gathering process.”

A report into Northamptonshire Police's failures in investigating the death of Harry Dunn

The report continued: “The duty (police sergeant) made the decision not to arrest.

“The rationale was largely based on a belief that the necessity test was not met, and information received that Anne Sacoolas was in shock.

“Whilst the welfare of any person is a concern for officers, this should not have prevented the arrest of Anne Sacoolas.”

Ms Charles, who was recently honoured with an MBE after her campaigning efforts led to road safety improvements near US airbases, said: “I don’t think you’re ever done grieving. There’s never any closure to losing a child. You live with it, it’s so profound.

“So the only thing I would ever say to anybody else who feels that they’ve got a fight ahead of them, dig deep, do your best, because you just never know the resilience that you’ve got until you absolutely have to find it.”

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Battle to convince MPs to back benefit cuts to more than three million households

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Battle to convince MPs to back benefit cuts to more than three million households

Plans for cuts to benefits which will impact more than three million households will be published today – as the government faces a battle to convince dozens of Labour MPs to back them.

Liz Kendall, the welfare secretary, has set out proposals to cut £5bn from the welfare budget – which she has said is “unsustainable” and “trapping people in welfare dependency”.

Disabled people claiming PIP, the personal independence payment which helps people – some of them working – with the increased costs of daily living, face having their awards reviewed from the end of next year.

An estimated 800,000 current and future PIP recipients will lose an average of £4,500 a year, according to a government assessment.

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Government’s battle over welfare reforms

The government also intends to freeze the health element of Universal Credit, claimed by more than two million people, at £97 a week during this parliament, and cut the rate to £50 for new claimants.

Under pressure from Labour MPs concerned particularly that changes to PIP will drive families into poverty, Ms Kendall will announce new protections in the bill today.

Sky News understands they include a 13-week transition period for those losing PIP; a higher rate of Universal Credit for people with the most serious conditions; and a commitment that disabled people who take a job will not immediately lose their benefits.

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Some 40 Labour MPs have signed a letter refusing to support the cuts; and dozens of others have concerns, including ministers.

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Benefits cuts explained

Ms Kendall is determined to press ahead, and has said the number of new PIP claimants has doubled since 2019 – at 34,000, up from 15,000.

Ministers say 90% of current claimants will not lose their benefits; and that many people will be better off – with the total welfare bill set to continue to rise over this parliament.

To keep the benefit, claimants must score a minimum of four points out of eight on one of the daily living criteria.

Ministers say claimants with the most serious conditions, who cannot work, will not face constant reassessments.

A £1bn programme is proposed, intended to give disabled people who can work tailored support to find jobs.

Some Labour MPs have angrily opposed the reforms – which will be voted on later this month.

Last night in a parliamentary debate, Labour MP for Poole Neil Duncan-Jordan disputed the Department for Work and Pensions (DWP) figures.

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He said: “We already know that PIP is an underclaimed benefit. The increase in claims is a symptom of declining public health and increased financial hardship disabled people are facing.

“We have the same proportion of people on working-age benefits as in 2015. This is not an economic necessity, it’s a political choice.”

Liz Kendall
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Liz Kendall

Rachael Maskell, Labour MP for York, called the proposals “devastating “. She said: “We must change direction and not proceed with these cuts.”

Disability groups say they fear an increase in suicides and mental health conditions.

The government’s own assessment forecast an extra 250,000 people could be pushed into poverty – including 50,000 children. It did not include the impact of people moving into work.

Ms Kendall was urged by MPs on the Commons Work and Pensions committee to delay the reforms, to carry out an impact assessment, but wrote back to the committee saying the reforms were too urgent to delay – and that MPs would be able to amend the legislation.

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Missing teen Cole Cooper: Grieving mum alleges ‘third party’ involved in death

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Missing teen Cole Cooper: Grieving mum alleges 'third party' involved in death

The grieving mother of a Scottish teen who vanished for a month has told Sky News she believes a “third party” was involved in her son’s death.

Cole Cooper, 19, was discovered dead in woods near Falkirk earlier this month following a missing persons inquiry his relatives don’t believe was taken seriously enough by police.

He was last seen on CCTV in May after leaving a house party, but police later revealed a former school friend had spoken to Cole a few days later nearby.

Speaking exclusively to Sky News, his mum Wendy Stewart, 42, has revealed her son had “various arguments” in the days and hours before he disappeared.

Wendy&Aimee
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Cole’s mum Wendy (L) and his aunt Aimee

In an emotional interview, she said: “He was only 19, he should never have been taken. I am never going to see him again. I never got a chance to give him a last cuddle and hold his hand.

“Someone has taken that away from me far too soon. Whether it be intentionally or unintentionally, I do believe there has been some involvement by a third party and the result is the death of Cole.”

The family, who organised a local vigil in Cole’s memory last weekend, have vowed to get “justice”.

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Asked what that means, Ms Stewart told Sky News: “Finding the culprit and getting justice that way. Finding the person that is responsible for the death of my child.”

Police previously said 400 residents were spoken to during door-to-door enquires and more than 2,000 hours of CCTV footage was collected.

The 19-year-old’s death is being treated as “unexplained”.

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Cole Cooper's mother Wendy Stewart, comforts her son Coby, 10 and daughter Casia, 11, during a vigil at the Glenskirlie Hotel in Banknock, f
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Cole Cooper’s mother Wendy at a vigil in Banknock. Pic: PA

Cole’s aunt Aimee Tennie, 32, revealed the family’s anger over the police handling of the case as they attempt to find out what happened.

She said: “We are aware of small details surrounding the weekend leading up to it with arguments. He had a few arguments over that weekend. We want the details re-examined thoroughly.”

Sky News put all of the family’s concerns and allegations to Police Scotland.

The force swerved our questions and responded saying: “Enquiries remain ongoing.”

Wendy Stewart claimed the probe has been handled “shockingly” with a failure to take her son’s disappearance seriously.

The 42-year-old said: “I have had to scream and shout from rooftops to be heard by the police. I don’t think they have handled it well.

“The police really need to take accountability and listen to families, they are reporting a missing child and understand the family knows their child best.”

Cole Cooper’s loved ones still have not been told when his body will be released to allow them to lay him to rest.

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