A number of analysts say that the British economy is heading for a long-term recession amid record high inflation in decades, although official data showed growth in October.

In particular, the Office for National Statistics reported that gross domestic product rose 0.5% during the month, while gross domestic product fell 0.6% in September, due in part to business closures due to the funeral of Queen Elizabeth II.

Bureau of Economic Statistics director Darren Morgan said auto sales, which “rebounded from very weak performance in September,” supported the economy “while the health sector also witnessed a strong month.”

And UK Chancellor of the Exchequer Jeremy Hunt said in a statement that despite the growth reflected in the numbers, “the way forward is difficult” given that high inflation exacerbated by the Ukraine crisis is “leading to slower growth worldwide, while The International Monetary Fund expects a third of the economy to suffer. “The world will come out of recession this year or next.”

The government and the Bank of England have indicated that they believe the UK is already in recession and the central bank is expected to continue it over the next year.

The most notable reason for the gloomy expectations is UK inflation, which has topped 11 per cent, the highest level recorded in the country in more than 40 years, as British wages are cut, leading to massive strikes by workers in the public and private sectors in the United Kingdom. and bills for electricity and materials have risen this year as a result of supply constraints caused by the Ukraine crisis and economic recovery from post-pandemic lockdown measures.

The British economy has taken an additional hit from the recent political turmoil and has raised interest rates in hopes of lowering inflation, while the Bank of England is expected to raise its key interest rate on Thursday for the ninth consecutive time.

And Ruth Gregory, a prominent economist at Capital Economics, said that “a sudden strong rise (of Gross Domestic Product in October) could push the Bank of England to another 75 basis point interest rate hike, and that it depends on the labor market. and inflation data for Tuesday and Wednesday.

Analysts also expressed expectations that the Federal Reserve and the European Central Bank will announce at their meetings this week a smaller increase in interest rates compared to recent decisions.

Raj Badiani, chief economist at S&P Global Market Intelligence, predicted that “monetary policy conditions will tighten further and the Bank of England is likely to raise the rate by fifty basis points to 3.5% this week and then to a peak of 4 .0% in February. 2023”, noting. Data showing “the economy faltered in the three months to October indicates that the recession appears to have begun in the third quarter of 2022 and is expected to last four seasons.”

The Bank of England also said that Brexit is hurting the UK economy, and the exit of the country to the European Union affects trade.

Source: AFP

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Robin Jackson is the editor-in-chief at 24PalNews. As an editor and author who covers business and finance, Robin shares the latest business news, trends, and insights with his extensive audience.

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