UK Economy Shrinks in August, Edging Closer to Recession

The UK economy unexpectedly contracted in August for the second time in three months, heightening the prospect of the country entering a recession.

The GDP dropped by 0.3% from July, with manufacturing and maintenance work in North Sea oil and gas fields being major contributors. The data also indicated how a spike in inflation was affecting consumers.

According to a Reuters survey of economic experts, growth was expected to be 0%.

The growth in output in July was revised down to 0.1% from a previous estimate of 0.2%, and GDP decreased 0.3% in the three months to August, the country’s first decline since the coronavirus outbreak in early 2021.

According to the Office for National Statistics, the economy is now anticipated to be back to its pre-pandemic level, having previously been assessed to be 1.1% larger.

Further ahead, Britain’s economy appears to be slowing rapidly as rising inflation hurts households and drives the Bank of England to hike interest rates rapidly, despite stagnant activity.