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(Bloomberg) — The U.K. economy expanded in October as business lost ground following the death of Queen Elizabeth II.
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Gross domestic product rose 0.5% from September, including an extra public holiday for the Queen’s funeral and a period of national mourning. Economists had expected an increase of 0.4%.
However, the figures will do little to dispel the gloom hanging over an economy already struggling with a historic cost-of-living crisis and possibly a prolonged recession.
Gloomy outlook Bank of England policymakers this week are expected to be deeply divided over how much to raise interest rates to fight inflation, which is at its highest level in 41 years. Investors expected a half-point increase to 3.5%.
“While today’s figures show some growth, I can honestly say that there is a tough road ahead,” Chancellor of the Exchequer Jeremy Hunt said. “Our plan has restored economic stability and will help moderate inflation next year, but will also lay the foundation for long-term growth through continued record investment in new infrastructure, science and innovation.”
The figures brought GDP up 0.4% from its level in February 2020, a month before the Covid-19 lockdown began. On a quarterly basis, the economy remains smaller than it was before the pandemic began.
Services, manufacturing and construction rose in October. Services grew from retail, wholesale trade and motor vehicle repair.
Health was boosted by a surge in coronavirus testing and vaccinations, which made the second largest contribution to services. It follows a campaign to give booster shots to vulnerable people.
Travel services, including agencies, tour operators and other reservation services, rebounded to 7.1% growth in October after a 9.7% contraction in September.
(Updates with details from the report.)
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