Economy returns to growth in October but recession still expected | Business News

The economy grew again in October, according to initial official figures that experts say could be the last to show an expansion for a while.

The Office for National Statistics (ONS) reported 0.5% growth – after a 0.6% fall in September, largely due to discontinuity operating as normal as the bank is on holiday for the Queen’s funeral.

October’s partial recovery, slightly stronger than economists had forecast, was mainly explained by the number of working days returning to normal rather than any real increase in output. quantity.

The ONS has charted the main boost coming from wholesale and retail activity – both of which were significantly impacted by the closures as a sign of respect for the late Queen.

As a result, economists still think a recession will be confirmed later this year.

That’s because output is said to be negative for the entirety of the current fourth quarter, following a 0.2% decline recorded in the third quarter through September.

The Bank of England and the Office for Budget Responsibility – both have stated confidence that the UK is in Depression – recession is expected to last through 2023 but remain shallow.

Economic activity slowed as high inflation, mainly caused by Russia’s war in Ukraine, curbed demand for spending.

Rising interest rates from the Bank, aimed at curbing inflation, raised borrowing costs to further dampen demand.

Fixed-rate mortgages have also not fallen back to levels seen before the September mini-budget saw financial markets protest against the government spending plans led by then Liz Truss .

New Prime Minister Jeremy Hunt, who has reverted to growth measures, said of the latest growth numbers: “High inflation, exacerbated by Putin’s illegal war, is slowing the pace. growth worldwide, with the IMF predicting a third of the world economy will shrink this year or next.

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The ‘Tories’ economy didn’t do well

“Although today’s figures show some growth, I want to be honest that there is a tough road ahead.

“Like the rest of Europe, we are not immune from the aftershocks of Covid-19, Putin’s war and soaring global gasoline prices.

“Our plan restores economic stability and should help bring inflation down next year, but also lays the groundwork for long-term growth through continued record investment in new infrastructure. , science and innovation.”

The Bank, which raised its Bank rate by 0.75 percentage points last month, is tipped to increase it by another 0.5 percentage points this week.

Energy-led inflation is expected to ease in the near term but is forecast to maintain pressure as the inflation rate is at a 41-year high of 11.1%.

Figures for November, released on Wednesday, are expected to show an annualized rate of 10.9%, according to economists polled by Reuters news agency.


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