London Daily

Focus on the big picture.
Tuesday, Apr 07, 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
Operation Europe: Trump Deploys Vance to Hungary to Save the EU
King Charles Faces Criticism From Some UK Christians Over Absence of Easter Message
Former UK Defence Secretary Raises Concerns Over Ability to Counter Iran Missile Threat
UK Signals Non-Involvement in Iran Conflict as Trump Reasserts Firm Deterrence Stance
US and UK Strengthen Medical Device Cooperation Following Tariff Removal
Trump Backs Steve Hilton for California Governor, Highlighting Reform Agenda
UK Seeks Closer Ties With Anthropic as AI Policy Divergence Emerges Across Atlantic
Experts Warn of Evolving Extremism After Teens Arrested in UK Ambulance Arson Case
UK Convenes Talks to Safeguard Shipping Through Strait of Hormuz After Conflict Escalation
Trump Highlights Strong Leadership in Critique of UK Stance on Iran
UK Authorities Review Kanye West’s Entry Status Following Festival Backlash
UK Considers Deploying Aircraft Carrier for US Independence Day Celebrations Amid Renewed Transatlantic Focus
United Kingdom Moves to Attract AI Firm Anthropic Amid Tensions with US Defense Officials
RAF Intercepts Iranian Drones in Middle East to Defend Allied Security Interests
Labour Signals Shift on Foie Gras and Fur Restrictions to Advance EU Trade Talks
Seven Arrested Near RAF Base as UK Authorities Respond to Protest Activity
Economic Pressures Mount as Analysts Warn UK Growth Is Being Constrained by Policy Burdens
UK Green Party’s Push for Church-State Separation Sparks Debate Over National Identity
Strategic Island Emerges as Growing Challenge for United States and United Kingdom Defense Planning
Pepsi Pulls Sponsorship from UK Festival Following Backlash Linked to Kanye West
Signs Emerge of Declining Enthusiasm for Social Media in the United Kingdom
Security Alert Raised Ahead of Meghan Markle’s Planned Visit to Australia
UK Food Halls Defy Hospitality Slowdown, Emerging as Bright Spot in Challenging Market
UK Sets Firm Conditions for Military Action, Insisting on Legal Mandate and Clear Strategy
UK Medicines Regulator Launches Probe into Peptide Clinics Over Health Claims
New North Sea Drilling Unlikely to Significantly Cut UK Gas Imports, Analysis Finds
Woman Linked to UK’s First All-Female Terror Plot Faces Deportation
Downed US Aircraft Over Iran Linked to Operations from UK Airfield
Two Men and Teen Detained in UK Following Attack on Jewish Charity Ambulance
UK Police Launch Inquiry After Firearms Left Unattended Outside Mayor’s Residence
Giuffre Family Calls on King Charles to Meet Epstein Survivors During US Visit
Amber Wind Warning Issued as Storm Dave Approaches Parts of the United Kingdom
Prince Harry and Meghan’s Australia Visit Set to Draw Heightened Global Attention
UK Considers Entry Fees for Overseas Visitors at Major Museums Ahead of 2026 Travel Season
UK Prime Minister and Kuwait Crown Prince Coordinate Security Response After Regional Escalation
Calls Grow to Expand Fully Paid Maternity Leave for UK Teachers Amid Workforce Pressures
UK Secures Tariff-Free Access to US Market in Landmark Pharmaceuticals Agreement
Trump Projects Strength in Critique of UK Leadership and Naval Readiness
UK FinTech Setback as VibePay and Smartlayer Cease Operations Amid Funding Pressures
UK Leads Global Coalition of Over Forty Nations to Address Strait of Hormuz Crisis
UK Firms Urged to Accelerate Preparation as New Sustainability Reporting Rules Take Shape
UK Moves Rapid Sentry Air Defence System to Kuwait After Drone Strike Escalation
Transatlantic Relations Tested as UK Seeks Balance While Trump Reshapes Strategic Approach
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
×