The UK economy rebounded slightly more than expected in October from September, when output was hit by a one-off holiday to mark Queen Elizabeth’s funeral, but a recession remained in sight, official data showed on Monday.
Gross domestic product grew 0.5 percent in October after contracting 0.6 percent in September, the Bureau for National Statistics said.
A Reuters poll of economists pointed to a 0.4 percent recovery.
Despite the slight upside surprise, the numbers are unlikely to change investors’ and analysts’ views that the UK economy is in for a bleak 2023.
“Despite October’s growth, it would take a significant turn in policymaking and/or global conditions to reverse the UK economy’s downward trend,” said George Lagarias, chief economist at Auditing Form Mazars.
Responding to the data, Treasury Secretary Jeremy Hunt said there was a “tough road” ahead.
“Like the rest of Europe, we are not immune to the aftershocks of Covid-19, Putin’s war and high global gas prices,” he said.
In the three months to October, the UK economy shrank 0.3 percent, less than a median forecast of a 0.4 percent contraction in the Reuters poll but the biggest contraction since early 2021, when the country was under austere lockdown Coronavirus restrictions stood.
The Bank of England – which is expected to hike interest rates for a ninth straight meeting on Thursday to curb risks of inflation topping 11 percent – said last month the UK economy was set for a two-year recession if interest rates rise would be as much as investors had priced in.
Even without further rate hikes, the economy will shrink in five of the six quarters through the end of 2023, it said.
“Overly aggressive monetary tightening could worsen the financial outlook for businesses and households and prolong the looming downturn,” said Suren Thiru, economics director at ICAEW, an accounting organization.
The ONS said the economy was 0.4 percent above its pre-pandemic size in October.
https://www.independent.ie/business/world/uk-economy-rebounds-from-royal-funeral-hit-but-outlook-remains-bleak-42212858.html The UK economy is recovering from the royal funeral but the outlook remains bleak