Economy defies expectations by GROWING 0.5% in October

Jeremy Hunt warned that strikes will dampen the economy today after new figures gave a glimmer of light with stronger than expected growth.

UK plc rose 0.5% in October, rebounding from a drop in business the previous month – which included a public holiday for the Queen’s funeral.

Analysts had forecast 0.4%. However, the Chancellor insisted there was still a ‘difficult road ahead’ with the country still on the path to recession.

In the three months to October, the economy contracted by 0.3%, according to the Office for National Statistics (ONS).

Mr Hunt said the situation ‘is expected to get worse before it gets better’, suggesting the wave of industrial action will make things more difficult – although he also stressed he understood why people were in anger at soaring inflation.

He told Sky News: “I think it’s a very difficult international picture.” About a third of the world’s economies are predicted to be in recession this year or next.

“We are no different in this country and, truth be told, things are likely to get worse before they get better, which makes it even more difficult when we have big public sector strikes right now.”

But he said the government needed to “stay the course” and implement its measures to reduce inflation.

In a separate statement released by the Treasury, Mr Hunt said: ‘High inflation, exacerbated by Putin’s illegal war, is slowing growth around the world, with the IMF predicting that a third of the global economy will be in recession this year or next.”

“While today’s numbers show some growth, I want to be honest there is a tough road ahead. Like the rest of Europe, we are not immune to the impact of Covid- 19, Putin’s war and high world gas prices.

“Our plan has restored economic stability and will help lower inflation next year, but also lay the foundation for long-term growth through continued record investment in new infrastructure, science and technology. innovation.”

Despite slowing growth, the Bank of England is all but certain to raise interest rates again on Thursday as it struggles to contain soaring inflation.

Economists forecast a rise of 3% to 3.5% – which would be the highest level in 14 years.

Suren Thiru, economics director at the Institute of Chartered Accountants of England and Wales (ICAEW), said October’s rebound was a “false dawn for the economy”.

He said: “The positive start to the fourth quarter may not prevent a recession, with growing pressure on incomes likely to lead to lower gross domestic product (GDP) in November and December, despite a possible increase of consumer activity at the World Cup.

“A half-point interest rate hike on Thursday is expected. However, tightening monetary policy too aggressively could risk worsening the financial outlook for businesses and households and prolonging the looming recession.

Chancellor Jeremy Hunt has warned there is still a ‘difficult road to travel’ with the country still on track for recession

ONS data showed the services sector – the biggest sector of the economy – rose 0.6% in October after falling 0.8% in September, boosted by a recovery in sales of cars as well as the healthcare sector due to a ramp-up in Covid-19 tests and vaccines.

The manufacturing sector increased by 0.7% and the construction industry expanded by 0.8% – the fourth consecutive monthly increase.

Darren Morgan, director of economic statistics at the ONS, said: “The economy rebounded in October, recovering from the impact of the additional public holiday for the state funeral.

“In particular, car sales rebounded from a very poor September, while the healthcare sector also had a strong month, with GP appointments, A&E attendance and the campaign Covid-19 fall reminders all of which drove the sector higher.

“Construction continued its strong trend over the past year and is at its highest level on record, with new housing construction fueling growth this month.

“However, over the past three months as a whole, the economy has contracted, with declines seen in services and manufacturing.”