London Daily

Focus on the big picture.
Sunday, Jul 05, 2026

Economy returns to growth in October - but recession still expected

Economy returns to growth in October - but recession still expected

There is no sudden recovery in output to cheer as the impact of the Queen's funeral continues to play out in UK growth figures.
The economy returned to growth in October, according to early official figures which experts suggest could be the last to show expansion for some time.

The Office for National Statistics (ONS) reported growth of 0.5% - following a contraction of 0.6% in September which was largely put down to disruption to usual activity because of the bank holiday for the Queen's funeral.

October's partial recovery, which was slightly stronger than economists had forecast, was mostly explained by the number of working days returning to normal rather than any real surge in output.

The ONS charted the main boost coming from wholesale and retail activity - both significantly affected by closures as a mark of respect to the late Queen.

As such, economists still expect a recession to be confirmed at the end of the year.

That is because output is tipped to be negative during the current fourth quarter as a whole, following the 0.2% dip recorded for the third quarter to September.

The Bank of England and Office for Budget Responsibility - which have both already declared their belief that the UK is in recession - expect the downturn to last throughout 2023 but remain shallow.

Economic activity has slowed as a result of high inflation, mostly caused by Russia's war in Ukraine, curbing appetite for spending.

Interest rate rises from the Bank, aimed at curbing inflation, have raised borrowing costs to further dampen demand.

Fixed rate mortgages, also, are yet to ease back to levels seen before the September mini-budget which saw financial markets baulk at the spending plans of the-then Liz Truss-led government.

New chancellor Jeremy Hunt, who has since rowed back on the growth measures, said of the latest growth figures: "High inflation, exacerbated by Putin's illegal war, is slowing growth across the world, with the IMF predicting a third of the world economy will be in recession this year or next.

"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."

The Bank, which raised its rate by 0.75 percentage points last month, is widely expected to impose a further hike of 0.5 percentage points this week.

It is anticipating an easing in energy-driven inflation ahead but forecast to maintain the pressure given that the rate of inflation is at a 41-year high of 11.1%.

Figures for November, due on Wednesday, are expected to show an annual rate of 10.9% according to economists polled by the Reuters news agency.
Newsletter

Related Articles

0:00
0:00
Close
Morocco and France Advance as 2026 FIFA World Cup Enters Quarterfinals.
Historic 2026 Tour de France Opens in Barcelona With Revamped Team Time Trial.
Global Mergers and Acquisitions Approach $4 Trillion Defying Geopolitical Tumult.
Negotiators Advance 20-Point Framework for Gaza Ceasefire and Demilitarization.
OECD Warns Middle East Conflict Will Depress Global Economic Growth.
Ukrainian Drones Strike Major Oil Terminal in St. Petersburg.
World Meteorological Organization Issues Urgent Alert Over Rapidly Intensifying El Niño.
United States Commemorates 250th Anniversary With Diplomatic Summits and Global Flotilla.
Iran Begins Days-Long Funeral for Supreme Leader Khamenei Amid Strait of Hormuz Standoff.
Technology giant reports surging carbon emissions driven by artificial intelligence infrastructure demands.
Artificial intelligence adoption accelerates workforce reductions across the technology and financial sectors.
Global technology and financial conglomerates collaborate to launch a new stablecoin standard.
United States regulators lift export restrictions on a major frontier artificial intelligence model.
Royal Society Exhibition Highlights Growing Focus on Public Trust in Science
Energy Costs and Supply Chain Risks Continue to Shape UK Business Strategy
Rapid Rise in Artificial Intelligence Adoption Reshapes UK Corporate Operations, ONS Says
UK Businesses Turn Defensive as Economic Outlook Weakens, Institute of Directors Data Shows
UK Government Faces Criticism Over Late Extension of Pub Hours for England Match
Inquest Continues Into Death of Noah Donohoe as Jury Deliberates Findings
Calls for Stronger Wildlife Attraction Safety Rules After Crocodile Enclosure Injury
City Fire Under Control After Major Blaze Sends Smoke Across Urban Area
Police Investigation Continues After Officer Killed During Road Closure Duties
Blackpool Hotel Fined £120,000 After Electric Shock Incident Involving Child
Whistleblowers Allege Delays in UK Special Educational Needs Support Services
Calls Grow for Improved Support for UK Armed Forces Personnel Facing Health Conditions
Rising UK Energy Price Cap Increase Prompts Wider Concerns Over Household Pressures
UK Businesses Remain Concerned Over Global Conflict Risks to Supply Chains, ONS Finds
Office for National Statistics Reports Rising Adoption of Artificial Intelligence Across UK Businesses
Institute of Directors Reports Deepening Pessimism in UK Business Confidence Index
England Prepare for World Cup Round of 16 Match Against Mexico in Mexico City
Royal Society Summer Science Exhibition Concludes in London After Week-Long Showcase of Research
Silverstone Hosts British Grand Prix as Lando Norris and Lewis Hamilton Lead Home Crowd Expectations
Cornwall Van Dwellers Face Homelessness Risk as Council Tightens Enforcement
Police Investigate Stabbing of Iranian Journalist in London
Rare Copy of US Declaration of Independence Discovered in UK Archive
Department for Education Data Shows Persistent Literacy Gap Among Disadvantaged White Pupils
London Casino Faces Legal Action Over Alleged Tip Distribution Practices
England Records Hottest June on Record as Heatwave Disrupts Services Nationwide
UK Foreign Office Ends Overseas Education Programme for Women and Girls After Shortfall
UK Lawmakers Call for Urgent Action to Preserve Historic Outdoor Lidos
Police Criticise Extended Pub Opening Hours for England World Cup Fixture in Mexico
UK Safety Authorities Warn Parents Over AI-Generated Child Abuse Imagery Risks
Reform UK-Led Council Struggles to Attract Sponsors for Union Flag Promotion Scheme
OpenAI UK Investment Uncertainty Grows After Reported Setback on Stargate Data Centre Site
British Medical Association Warns of Severe Financial Crisis and Possible Staff Cuts
UK Devolution Debate Intensifies as Celtic Nations Prepare Breakup Contingency Plans
Starmer Signals Labour Transition as Burnham Emerges as Potential Successor
UK Government Consults International Partners on Maritime Trade Security and Energy Market Stability
Rare Revolutionary-Era Documents Discovered by UK Archives and Undergoing Authentication
UK Consumer Confidence Remains Deep in Negative Territory as Household Spending Stays Cautious
×