(CTN News) – British economy declined in the three months that ended in October, demonstrating the harm that increasing interest rates and runaway inflation are doing to the country’s commerce and industry.
When compared to the three months through July, the period’s gross domestic product, the broadest indicator of economic activity, decreased by 0.3%, the Office for National Statistics said on Monday.
The reduction occurred despite predictions that the GDP rose by 0.5% in October after falling by 0.6% in September due to an additional public holiday in honor of Queen Elizabeth II, which artificially dampened economic activity.
Martin Beck, the chief economic consultant to the EY Item Club, claims that despite the recovery in October, there is still a significant probability that the British economy will contract for a second quarter in the last three months of this year.
One way to define a recession is when production declines for two consecutive quarters.
Similar to the US and Europe, which base their determinations on other information, such as growing unemployment and job losses, Britain lacks an impartial authority that declares recessions.
Beck said in a statement that “the near-term prognosis remains dismal,” adding that “most of the effect of this year’s interest rate hikes is yet to be realized” and that “consumers continue to suffer under the weight of rising inflation.”
In the three months leading up to October, output by productive industries—which include manufacturing, mining, and energy production—fell 1.7%. Services, which make up around 45% of the British economy, had a 0.1% decline throughout that time.
The high price of food and energy sped consumer price inflation to a 41-year high of 11.1 percent in October.
The Bank of England has authorized eight consecutive interest rate rises as it tries to control inflation. As a result, the bank’s key rate increased to 3% from 0.1% a year earlier.
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