UK facing ‘tough road’ as recession looms despite the economy growing in October

• Britain’s economy returned to growth in October as activity bounced back from the impact of the additional bank holiday for the Queen’s funeral, however, a long recession is still expected. The Office for National Statistics said gross domestic product (GDP) rose by 0.5% in the month, after a decline of 0.6% in September when many businesses closed their doors during the national mourning period.
• However, GDP shrank by 0.3% in the three months to October, reflecting concerns over the strength of the economy as consumers and businesses tightened their belts amid the highest rates of inflation for 41 years.
• The Bank of England said last month the economy was probably already in a recession that could last until the end of 2023 after GDP fell by 0.2% in the three months to September. Despite a recovery in October, a return to contraction in November and December could spell a second consecutive quarter of decline – the technical definition of a recession.
• With inflation above 11% during Russia’s war in Ukraine driving up energy costs, the Bank of England is widely expected to further raise interest rates on Thursday for the ninth time in a row. However, the rate-setting monetary policy committee is expected to be split, with a minority of its nine members likely to push for a slower pace of rate increases amid the risk of a lengthy recession.
• Jeremy Hunt, the chancellor, said high inflation was slowing economic growth across the world, and the International Monetary Fund had forecast a third of the world economy will be in recession this year or next.

(Source: The Guardian