LONDON: The UK economy contracted unexpectedly in August after slowing growth the previous month. which has been affected by the cost of living crisis and rising energy costs Official information released on Wednesday.
Gross domestic product contracted 0.3% in August. which decreased from production and service The National Statistical Office said in a statement. British economy unexpectedly contracted in August.
That was worse than expected growth to stabilize and was followed by a 0.1% expansion in anemia in July. which was downgraded from 0.2% growth.
“The economy contracted in August. Both production and services declined,” said ONS chief economist Grant Fitzner.
Consumer services shrank 1.8%, with the biggest declines in sports, entertainment and recreation.
“The decline in GDP in August is likely the start of a downtrend that will continue next year,” said Samuel Toms, UK chief economist at research consulting firm Pantheon. Macro said
“This decline was driven by a 1.8 percent monthly drop in output in the services sector faced by consumers. This reflects the real income that is squeezed by the household sector.”
Inflation in August hit 9.9 percent, near a 40-year high, as energy prices skyrocketed from the fallout from the Ukraine war. As a result, the UK’s cost of living crisis has worsened.
The ONS added on Wednesday that oil and gas production fell because summer maintenance in the North Sea was more than usual for the month, while production fell markedly.
The sad news comes amid market turmoil after recent British debt-funded budgets, which have also included strong energy prices.
And it also comes a day after the IMF predicted a sharp slowdown in the UK economy. This is expected to slow from 3.6 percent this year to just 0.3 percent in 2023.
“Countries around the world are facing challenges right now. This is especially a result of high energy prices driven by Putin’s barbaric actions in Ukraine. (Vladimir) Putin,” British Finance Minister Kwazi Kvarteng said.
He added that Prime Minister Liz Truss’ government has a “comprehensive plan to protect families and businesses from soaring energy bills this winter”.
However, markets panicked over Kwarteng’s budget, which led to higher bond yields and the fall in the pound. and triggered a series of bond buying interventions from the Bank of England.