City experts are warning that the UK is still heading into recession.
The 0.5% increase in GDP in Octoberdoes not mean that the downturn has been averted.
Jeremy Batstone-Carr, European Strategist at investment bank Raymond James, says rising inflation and higher interest rates are hitting growth:
“This tentative rebound from sharply falling GDP in September may look like a positive step back toward growth, but we should not get over-excited. 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.
“The economy is no longer teetering on the edge of recession; it is fully in one. We are now feeling the pain of both relentless inflation and interest rate rises, which are both crippling business and household spending. The Bank of England’s Monetary Policy Committee is divided on how sharply to rise base rates, but it looks increasingly likely we will be living with another 0.5% increase by the end of this week.”