Dec. 12 (UPI) — On a month-on-month basis, the British economy returned to growth though an uphill battle remains as inflation is still above 10% on an annual basis, the government said Monday.
The government’s Office for National Statistics (ONS) reported that month-on-month gross domestic product improved by 0.5% in October, the last full month for which it has data. That follows a contraction of 0.6% in September.
The British economy has fumbled since exiting the European Union. Former Prime Minister Liz Truss was the shortest-tenured leader ever, resigning after 45 days in office after her tax cut plan led to the devaluation of the British pound and a bruising resignation letter from ex-Home Secretary Suella Braverman.
Two months and a new prime minister, Rishi Sunak, later and the ONS reported that the services sector — comprised of intangibles like housecleaning or nursing — was the main driver of growth in GDP, expanding by 0.6% in October.
Production trends were largely unchanged from September to October, though construction expanded by 0.8%, charting its fourth consecutive month of growth.
Apart from the fallout from the Truss premiership, the nation’s economy is under pressure from the spike in food and energy prices triggered by Russia’s invasion of Ukraine. Finance Minister Jeremy Hunt in October said there are only so many things that policymakers can address.
“We cannot control what is happening in the rest of the world, but when the interests of economic stability mean the government needs to change course, we will do so,” he said.
Inflation nevertheless remains elevated at 11.1%, compared with a 2% target rate. The next reading on inflation comes Tuesday.
The Bank of England, meanwhile, said the nation’s economy may already be in recession. The economy contracted by 0.3% over the three months ending in October.
The country’s central bank set its lending rate at 3%, its highest in decades, and another 0.5% rate hike is expected on Thursday.