London pre-open: Stocks seen down as UK economy unexpectedly contracts

London stocks were set to fall at the open on Friday following weak sessions in the US and Asia, as data showed the UK economy unexpectedly contracted in October.

The FTSE 100 was called to open down around 24 points.

Data released earlier by the Office for National Statistics showed the economy shrank 0.1% in October following a 0.1% decline the month before, and versus expectations for 0.1% growth.

Liz McKeown, director of economic statistics at the ONS, said: "The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.

"Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms. However, the economy still grew a little over the last three months as a whole."

Elsewhere, a long-running survey showed that consumer confidence nudged modestly higher in December.

The latest consumer confidence index from GfK was -17, up one point on November and continuing a run of modest increases. However, it was only five points stronger than December 2023, when the index was -22.

The index for expectations about the economy over the next 12 months was unchanged at -26.

The major purchase index was also flat, at -16. "Consumers are still thinking twice about big ticket purchases, and whether they will bring Christmas cheer," said Neil Bellamy, consumer insights director at GfK

However, the personal financial situation measure for the coming year improved by two points, nudging back into positive territory at 1 and echoing the more upbeat trends seen in spring and summer.

Bellamy said: "In December, consumers adopted the holding pattern we’ve seen for much of 2024, with the one point increase to -17 very close to the 2024 average of -18.

"Consumer confidence is still far from strong, but there is some room for optimism.

"We need to see robust improvements in these perceptions [about the economy] before we can start talking about sustained improvements in the consumer mood."

Looking at 2024 as a whole, Bellamy said the year had been characterised by "ups and downs" in consumer confidence, though by less than in previous years.

"Volatility is down, but will it stay that way?" he said. "Of all the major events in 2024, the general election was the most impactful, with initial post-election optimism giving way to a large seven-point fall in September, as consumers were spooked about government messages about the state of the economy."

In corporate news, asset manager Schroders is reportedly looking to sell its Indonesian business as it considers exiting some sub-scale markets under new boss Richard Oldfield.

After several disappointing results Oldfield is attempting to turn the company around by offloading underperforming units, the Reuters news agency reported citing two unnamed sources with knowledge of the matter.