London stocks exhibited a lackluster performance on Thursday following a GDP report that met expectations, as investors maintained a cautious stance in light of ongoing inflationary pressures and varied corporate announcements. The blue-chip FTSE 100 fell 0.06% by 1017, while the mid-cap focused FTSE 250 declined 0.2%. Britain’s economy experienced a slight expansion of 0.1% from July, aligning with analyst expectations, providing a moment of respite for finance minister Rachel Reeves ahead of her November budget.

Nonetheless, the yearly growth rate is improbable to prevent the impending tax increases, for which investors are already preparing. The economy is currently facing challenges associated with decelerating growth, all while dealing with the highest inflation rates observed in advanced economies. Policymakers at the Bank of England, having maintained interest rates at 4% in the previous month, are navigating the challenges posed by ongoing high inflation alongside sluggish economic growth. Investor focus is shifting towards the upcoming inflation data, which will significantly impact the Bank of England’s decision on whether to lower interest rates in November or December, or to postpone such action until early 2026.

In the market, travel and leisure stocks led sectoral declines, falling 1.4%, after Whitbread reported a 7% drop in half-year profit, weighed down by weaker food and beverage sales. The owner of Premier Inn in the UK experienced a decline of 9.6%, marking it as the poorest performer in the FTSE 100. AstraZeneca experienced a decline of 1% following Deutsche Bank’s decision to downgrade the pharmaceutical company from “hold” to “sell”. Conversely, Croda International rose 3.6% to the top of the FTSE 100, boosting the broader chemicals sub-index by 1.5%.

The chemical manufacturer disclosed an increase in sales while upholding its profit forecast for the fiscal year. XPS Pensions Group gained 3% after the pensions consulting firm reported better-than-expected revenue for the half year. Travis Perkins has fallen to the bottom of the FTSE 250, declining by 3.5%, as the British building materials supplier continues to experience ongoing margin pressure and has refrained from providing a full-year profit outlook.