The UK economy shrinks by 0.3% in three months from October.
The three-month period October to October saw a decline in Britain’s economy, which is proof of the impact that rampant inflation and rising interest rates have on industry and business.
The gross domestic product, which is the broadest measure of economic activity, declined by 0.3% over the same period as the three months through July. This was according to the Office for National Statistics Monday.
This decline occurred despite estimates showing that GDP rose 0.5% in October, following a 0.6% drop for September. The artificially decreased economic activity in September was caused by an additional public holiday to commemorate the death of Queen Elizabeth II.
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Martin Beck, chief economist at the EY Item Club, said that despite the October rebound, there is still a high chance that the British economy will shrink for a 2nd consecutive quarter. A recession is defined as two consecutive quarters of falling output.
The UK doesn’t have an independent body that declares recessions, like the U.S. or Europe. These bodies use data such as rising unemployment and job loss in their assessments.
Beck stated that the near-term outlook is still bleak as consumers continue to suffer under the burden of high inflation and the effects of interest rate rises this year.
In the three months to October, output from productive industries (which include mining, manufacturing, and energy production) fell 1.7%. The decline in output by service industries, which make up about four-fifths the British economy, was 0.1%.
Inflation in consumer prices reached a 41 year high of 11.1% October. This was driven by high food costs, and energy.
As it struggles to control inflation, eight consecutive interest rate increases have been approved by the Bank of England. This has raised the key rate of the bank to 3%, from 0.1% one year ago.