Britain's economy recovered in October slightly more strongly than expected from September when output was hit by a public holiday for Queen Elizabeth's funeral, but the recession remained strong according to official data on Monday.
Gross domestic product rose 0.5% after a 0.6% contraction in September, the Statistics Department reported. A Reuters poll of economists had indicated a 0.4% rebound.
The figures are unlikely to change the view among investors and analysts that Britain's economy faces a 2023 recession. Britain's financial markets did not show any reaction to the figures.
"Despite growth in October, it will take a significant change in policymaking and/or global conditions to reverse the downward trajectory of the British economy," said George Lagarias, chief economist at audit form Mazars.
He continued, "Like the rest of Europe, we are not immune to the aftershocks of COVID-19, the Russia-Ukraine war and high global gas prices," he said.
In the three months to October, Britain's economy shrank by 0.3%, a smaller drop than the median forecast for a 0.4% contraction in a Reuters poll but the biggest fall since early 2021 when the country was under strict coronavirus restrictions.
The Bank of England looked set to raise interest rates for the ninth consecutive meeting on Thursday to curb risks from inflation rates above 11%. The BoE has previously warned that Britain's economy looks poised for a two-year recession if interest rates rise as much as investors have priced in.
Even without further rate hikes, the economy will shrink in five of the six quarters through the end of 2023, he said.
Tightening monetary policy too aggressively could risk worsening the financial outlook for firms and households, and extend the looming downturn,” said Suren Thiru, director of economics at ICAEW, an accountancy trade body.
