By Andy Bruce and Suban Abdulla
MANCHESTER, England, Dec 12 (Reuters) - Britain's economy shrank unexpectedly during the three months to October, according to official figures on Friday that are likely
to boost expectations for Bank of England interest rate cuts.
The Office for National Statistics (ONS) said gross domestic product contracted by 0.1% in the August-to-October period. Economists polled by Reuters had forecast a flat reading.
In October alone, the economy contracted by 0.1%, against forecasts for a 0.1% rise. While single-month GDP figures are volatile and prone to revision, Friday's data means the economy hasn't grown since June.
That underlined the tough economic backdrop that finance minister Rachel Reeves faced when she readied a big tax-raising budget that she announced on November 26.
Sterling fell slightly against the U.S. dollar on the back of the data, which showed unexpectedly sharp declines in the dominant services sector as well as construction.
Friday's data also casts doubt on the BoE's expectation that the economy will grow around 0.3% in the fourth quarter as a whole.
On Thursday, investors assigned a roughly 90% chance of a BoE interest rate cut on December 18.
Manufacturing output, impaired in September by a cyber attack on Jaguar Land Rover, failed to recover as economists had hoped.
The ONS said retailers in particular had a bad month, part of the reason why services output contracted by 0.3% in October against forecasts for a flat reading.
In response to the data, the finance ministry said it was determined to defy the forecasts on growth and create good jobs.
Compared with a year earlier, economic output was 1.1% higher in October, the ONS said, weaker than the 1.4% expansion forecast by economists.
(Reporting by Andy Bruce and Suban Abdulla; Editing by Kate Holton)
