UK economy bounces back but still headed for recession

The economy returned to growth in October, according to figures released on Monday by the Office for National Statistics, but the UK is still heading for recession.

The economy grew 0.5% in October following a 0.6% contraction in September, when it took a hit from the funeral of Queen Elizabeth. This was a touch ahead of economists’ expectations for 0.4% growth.

In the three months to October, however, the economy shrank by 0.3%, versus expectations of a 0.4% contraction. This marked the biggest decline since early 2021.

Chancellor Jeremy Hunt said: "While today’s figures show some growth, I want to be honest that there is a tough road ahead.

"Like the rest of Europe, we are not immune from the aftershocks of Covid-19, Putin’s war and high global gas prices.

"Our plan has restored economic stability and will help drive down inflation next year, but also lay the foundations for long-term growth through continued record investment in new infrastructure, science and innovation."

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the monthly rise in GDP is likely to have been more of a temporary upswing rather than the start of a more positive chapter for the economy.

"A rebound in services largely accounted for the lift, after many companies scaled back promotional events, and workers had a bank holiday for the monarch’s funeral in September. However, production remains flat and while construction grew by 1.1%, more recent data indicates that sentiment in the building sector soured in November," she said.