UK economy barely grew in October, adding to interest rate hike doubts

UK economy barely grew in October, adding to interest rate hike doubts

Reuters/London

Britain’s economy barely grew in October, even before the emergence of the Omicron coronavirus variant, further denting expectations that the Bank of England (BoE) will raise interest rates next week for the first time since the pandemic struck.

Gross domestic product edged up by just 0.1%, slowing sharply from September’s 0.6% growth and much weaker than a forecast of 0.4% in a Reuters poll of economists.

The world’s fifth-biggest economy remained 0.5% smaller than it was just before Britain was first hit by Covid-19 in early 2020, the Office for National Statistics said.

“We’ve always acknowledged there could be bumps on our road to recovery,” finance minister Rishi Sunak said, adding that Britain’s economic support measures and vaccine programme would keep the recovery on track.

Over the three months to October, the economy grew by 0.9%, its slowest since a lockdown in early 2021, the ONS said.

“Hopes that either the health or economic pain of this crisis would be all over by Christmas have been dashed,” said James Smith, research director at the Resolution Foundation think-tank.

“The possibility that restrictions will need to be tightened, combined with high inflation and rising energy bills, means government should prepare for fresh targeted economic support