Recession warning despite economy’s October bounce

THE UK economy shrank by 0.3pc in the three months to October, suggesting the economy is already in recession even as an increase in retail sales and a rise in GP appointments drove a monthly rebound.

The Office for National Statistics (ONS) said a rise in appointments alongside rising A&E attendance and more Covid booster shots helped the economy grow by 0.5pc in October.

This follows a contraction of 0.6pc in September and was in line with expectations. September’s decline was affected by the extra bank holiday to mark the funeral of Queen Elizabeth II.

Jeremy Hunt warned that the UK economy faced a “tough road ahead” as he blamed “high inflation, exacerbated by Putin’s illegal war” for “slowing growth across the world”.

The Chancellor claimed tax rises and spending cuts in the Autumn Statement would help “drive down inflation next year”, adding that spending plans would “lay the foundations for long-term growth through continued record investment in new infrastructure, science and innovation”.

October’s growth was driven by the dominant services sector, which was buoyed by a rise in retail and car sales. Construction output also rose, while Britain’s industrial sector was broadly flat. Darren Morgan, the ONS’S director of economic statistics, said the rollout of the Covid booster and flu vaccination campaign also helped to bolster economic activity.

In September, just under a million vaccines were delivered, compared with four million in October.

Mr Morgan said: “Car sales rebounded after a very poor September, while the health sector also saw a strong month, with GP appointments, A&E attendance and the Covid booster campaign all driving up the sector.”

However, most analysts believe the economy is already in recession. The economy shrank by 0.2pc in the three months to September. Another quarter of economic decline would put the economy into recession for the first time since the pandemic.

Jeremy Batstone-carr, European Strategist at Raymond James, said: “Half of September’s fall in GDP was due to the one-off bank holiday for the Queen’s funeral, so we were always likely to see a correction as the UK returns to regular working days. Today’s GDP figures flatter to deceive, concealing an otherwise-shrinking economy.”

Mr Morgan also said strikes, particularly by rail workers, had hit the hospitality sector hard, while port strikes had affected hauliers.