United Kingdom economy flatlines in October as construction shrinks

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The hardest-hit sectors were manufacturing and housing construction.

Data showed that monthly growth of services and production in October increased by 0.2 percent and 0.1 percent, respectively.

UK GDP was flat in the three months to October 2019, according to the latest data from the Office for National Statistics.

However, the single currency struggled to capitalise on today's positive data as the outlook for the Eurozone's economy still remains bleak amid the EU's trade tensions with the USA and slower global growth.

The lackluster three-month GDP performance followed third quarter growth figures of only 0.3 percent, while year-over-year growth slowed to 0.7 percent in October - the lowest rate of GDP growth since March 2012.

Construction output fell 2.3% in the October amid declines in residential building and infrastructure development activity.

"With GDP in October merely in line with Q3's average, it now looks set to undershoot the MPC's forecast for a 0.2% quarter-on-quarter increase in Q4. Nonetheless, if the general election yields a majority in the Commons either to ratify the PM's existing deal or to change course to a much softer form of Brexit or none at all, then the subsequent recovery in business and consumer confidence likely would enable the economy to regain some momentum", says Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics. Crucially the UK's domestic challenges come against a weak global economic outlook for next year.

The UK will go to the polls this Thursday. "Brexit uncertainty has dampened business investment over the past couple of years and broader political uncertainty may have an impact on upcoming data releases". However, pollsters are quick to point out that there are many wild-card factors in this election from the registration of more than 3 million younger voters to the effects of calls for the electorate to abandon traditional party loyalties and vote for candidates best placed to beat the Conservative candidate (particularly in marginal seats) to deny Mr Johnson a majority which would allow him to push through his Brexit deal.

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