BUSINESS LIVE: UK GDP shrinks 0.3%; Entain boss exits; Workspace embraces solar power

Dr Roger Barker, director of policy at the Institute of Directors:

‘There is very little of comfort in the latest GDP figures. The emerging picture is one of a sinking economy. The possibility that we will move into recession next year has increased.

‘October was an exceptionally wet and windy month. So, declining output in sectors like construction, retail and hospitality was not entirely unexpected.

‘However, declines in service sectors such as computer programming, consultancy and the media may be suggestive of more persistent economic weakness.

‘Although the labour market remains tight, the emerging economic picture points to a need for the Bank of England to start cutting interest rates sooner rather than later. We hope that it does not delay its policy response too long as it did at the beginning of the current cycle.’

Chemring reported booming demand yesterday, as it cashed in on global instability.

The defence group, which makes materials and components for missile systems, explosives and propellants, said orders hit £756million in the year to the end of October.

This was up 40 per cent on the previous year. And the order book is at its highest level in over a decade at £922million, the company said.

Lindsay James, investment strategist at Quilter Investors:

‘UK GDP fell 0.3% month-over-month in October, down from 0.2% in September and missing estimates, piling the pressure on the Bank of England ahead of Thursday’s interest rate decision.

‘While no rate cuts are expected tomorrow, or for some time, it will be crucial to see how the BoE is monitoring economic growth going forward and what that might mean for the path of interest rates. Calls for rate cuts are likely to grow stronger should this sort of economic data persist.

‘Services in the UK has always been the strongest part of the economy, but this month it has driven the fall in GDP as a result of information and communication services struggling. If the UK is to avoid recession it is the services sector that is likely to prevent it, so seeing such a sharp fall on the month will be cause for concern.

‘With GDP growth over the last rolling three month period also flat, economic conditions in the UK are clearly tough as we work through the winter months.

‘The BoE will be hoping it can muddle through so its higher for longer narrative can persist, but how long this can continue remains to be seen.

‘This may be a fairly backward looking data set, given it is for October, but it will remain a crucial one to watch as we enter 2024. The Bank of England has done a good job not tipping the UK into recession to date, but interest rates are biting now and further contraction cannot be ruled out. It could be a while before things get better again.’

Flexible office space provider Workspace Group has reached an agreement with Europe’s largest generator of renewable energy to supply around two thirds of the firm’s expected electricity demand for the next 10 years.

Statkraft will provide Workspace with all the electricity generated by a newly constructed solar plant in Devon, contributing to the UK’s clean energy capacity.

This agreement marks the first clean energy deal made by a London office provider to date, sourcing electricity directly from a renewable energy generator, the group said.

Sonal Jain, head of sustainability at Workspace, said:

‘Today we have taken a significant step on our path to net zero carbon by decarbonising around two thirds of our portfolio’s electricity use.

‘The recent agreement at COP28 for countries to triple their renewable energy capacity by 2030 is supported by decisions like ours, which enable new capacity on the grid, rather than simply procuring from the existing supply.

‘This is by far the most responsible way we can acquire a substantial share of clean green electricity.’

Neil Birrell, Chief Investment Officer at Premier Miton Investors, commented:

‘The UK economy shrank by 0.3% in October, more than estimated, but given recent data, that should not be too much of a surprise.

‘It’s clear that economic growth has been stalling, as should be expected given policy measures, which is where all eyes will be focused now.

‘This data is historic but it’s all about what happens next, and we will hear the thoughts of major central banks in the next two days.

‘The Bank of England will be pleased that their actions have worked, but worried that they have gone too far. We will find out tomorrow.’

Bond yields fell yesterday as fresh signs of easing inflation pressure threw the spotlight onto central banks ahead of key interest rate decisions.

UK figures showed a slowdown in wage growth while in America inflation dipped to 3.1 per cent.

The data comes ahead of the US Federal Reserve’s rate decision tonight.

The chief executive of Ladbrokes owner Entain will step down from the gambling giant with immediate effect.

Jette Nygaard-Andersen will be replaced by Stella David, currently a non-executive director, on an interim basis.

David will remain in the role until a permanent replacement is found.

Nygaard-Andersen said: ‘The past three years have been rewarding and challenging in equal measure.

‘The resolution of the HMRC investigation into the legacy business, which was sold by a former management team in 2017, offers a clean inflection point for me and for Entain.

‘The Group is now safe, stable and sustainable and I believe that this is the right time to move on to other business and career opportunities.’

The British economy shrank by 0.3 per cent in October, missing economist forecasts of flat growth for the month, fresh data from the Office for National Statistics shows.