Britain is moving towards a technical recession faster than previously thought. According to data from the National Statistics Office ONS, the country’s gross domestic product fell month-on-month in August.
The British economy unexpectedly contracted in August and is heading towards recession. Gross domestic product (GDP) fell 0.3 percent from the previous month, according to data presented by the National Statistics Office ONS. Experts had expected stagnation. Extensive maintenance work on UK rigs in the North Sea oil and gas fields contributed to the economic weakness. According to the statisticians, business was also relatively poor in many parts of the service sector – from hairdressers to hotels.
According to revised figures from the ONS, economic output increased by a meager 0.1 percent in July. In a first estimate, there was talk of plus 0.2 percent. In the period June to August, British GDP shrank by 0.3 percent. The Bank of England (BoE) expects economic output to have declined slightly in the summer quarter. And the prospects for autumn and winter are not rosy in view of the energy crisis: economic output is likely to slow down sharply, since rising inflation is hitting households and the central bank is still under pressure to raise key interest rates significantly.
“Continued pressures on household finances continue to weigh on growth and may have pushed the UK economy into a technical recession from the third quarter of this year,” said Yael Selfin, chief economist at KPMG UK. Economists speak of a technical recession when economic output falls for two consecutive quarters. The conservative government in London wants to boost the economy with debt-financed tax cuts, which, according to the International Monetary Fund, would thwart the efforts of the central bank to fight inflation.
