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LONDON, Dec 12 (Reuters) – Britain’s economy rebounded slightly stronger in October than expected in September after a public holiday to mark Queen Elizabeth’s funeral hit output, but a recession remained on the cards, official data showed on Monday. .
Gross domestic product rose 0.5% in October after a 0.6% contraction in September, the Office for National Statistics said.
A Reuters poll of economists pointed to a 0.4% bounce-back.
Despite a slight upside surprise, the figures are unlikely to change the view among investors and analysts that Britain’s economy faces a bleak outlook in 2023.
“Despite October’s growth, it would take a significant shift in policymaking and/or global conditions to change the British economic trajectory downwards,” Georges Lagarias, chief economist at auditing form Mazars, said.
In response to the data, Finance Minister 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, Britain’s economy shrank 0.3%, a smaller drop than the average forecast of a 0.4% contraction in a Reuters poll but the biggest drop since early 2021 when the country was under strict coronavirus restrictions.
The Bank of England – which looks set to raise interest rates for a ninth consecutive meeting on Thursday to contain risks of inflation rates above 11% – said last month that Britain’s economy was set for a two-year recession if interest rates were to rise as investors priced them out.
Even without further rate hikes, the economy will contract in five of the six quarters through the end of 2023, he said.
“Tightening monetary policy too aggressively could worsen the financial outlook for firms and households and risk prolonging the recession,” said Suren Thiru, director of economics at accountancy trade body ICAEW.
The ONS said the economy was 0.4% above its pre-pandemic size in October.
Reporting by Andy Bruce Editing by William Schomberg
Our Standards: The Thomson Reuters Trust Principles.
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