UK stocks closed the trading week on a downward trend following an unexpected contraction in the economy during October, just ahead of the government's forthcoming budget presentation. The FTSE 100 index experienced a decline of 0.14% at the end of trading on Friday. Monthly gross domestic product in Britain fell by 0.1% in October, mirroring the same decrease observed in September and falling short of the consensus forecast, which expected a 0.1% increase.
The Office for National Statistics indicated that this decline was primarily driven by a significant slump in production output. Analysts are evaluating the implications of these recent economic figures for the Bank of England's forthcoming monetary policy decision set for December 19. ING has noted that the central bank is likely to remain 'laser-focused' on inflation.
The firm commented, 'With services inflation hovering around 5%, next week's meeting is likely to be a bit of a non-event, as policymakers are expected to keep rates on hold until February.' BofA Global Research also posited that the recent GDP figures are unlikely to sway the upcoming policy rate. 'In our view, it's too early for data to significantly influence the BoE or for them to overly weigh these downside risks.
We anticipate rates will remain unchanged at 4.75% next week, considering their cautious guidance, fiscal easing, and risks associated with persistent inflation,' BofA added. In additional economic updates, the trade deficit for goods and services reduced by 900 million pounds sterling, standing at 10.1 billion pounds over the three months leading to October, attributed to a larger downturn in imports compared to exports.
On the corporate side, the UK Office of Communications, known as Ofcom, imposed a fine of 10.5 million pounds on International Distribution Services ($IDS), specifically targeting its unit Royal Mail for failing to meet delivery targets for the fiscal year ending March 2024. The shares of IDS saw a slight rise of 0.28% at the market close.
Meanwhile, shares of Impax Asset Management Group ($IPX) plummeted by 23.05% after it was announced that financial advice company St. James's Place ($STJ) would terminate its engagement of the firm as the manager of its Sustainable & Responsible Equity Fund. This termination is expected to take effect in February 2025, pending approval by the fund's unitholders during a meeting scheduled for January 2025.
St. James's Place, contrastingly, observed a gain of 2.01%..