‘We feel rudderless’: economy shrinks by 0.3% sparking fears of recession
The UK’s economy shrank by 0.3% in August from July, sparking fears of a recession.
The latest fall comes after growth of just 0.1% in July. This was revised down from an initial estimate of 0.2%.
According to the latest figures from the Office for National Statistics, production fell by 1.8% in August after a fall of 1.1% in July (revised down from a fall of 0.3% in our previous publication) and was the main contributor to the fall in GDP; this fall was mainly because of a decrease of 1.6% in manufacturing.
Services also fell by 0.1% in August, after growth of 0.3% in July.
Health and social work activities, and arts, entertainment and recreation activities fell by 1.3% and 5% respectively and were the largest contributors to the small fall in services in August, partially offset by growth of 1.2% in professional, scientific and technical activities.
“The economy shrank in August with both production and services falling back, and with a small downward revision to July’s growth the economy contracted in the last three months as a whole,” said ONS chief economist Grant Fitzner.
“Oil and gas production fell as more scheduled North Sea summer maintenance took place than usual. Notable decreases were also seen across much of manufacturing.
“Health also contributed to the decline, with a drop in the number of hospital consultations and operations.
“Sports events too had a slower month after a strong July and many other consumer-facing services struggled with retail, hairdressers and hotels all faring relatively poorly.
“On the positive side, these falls were partially offset by stronger than usual summer performance from many professional services such as lawyers, accountants and architects.”
Mary Maguire, managing director of Astute Recruitment, said: “It feels like we are rudderless economically. With the economy shrinking, businesses need decisive and adept leadership, but instead we have non-urgency and ineptitude. The Government needs to act fast and decisively and instead what we’re getting is ill-thought out policies and U-turns.”
Scott Gallacher, chartered financial planner at Leicestershire-based independent financial advisers, Rowley Turton, added: “It currently feels like we’re on the Titanic. Some sectors, like Leonardo DiCaprio’s character Jack, are in steerage, while others, for now at least, are in first class, doing exceptionally well. However, it feels like everyone aboard UK plc is about to sink to the depths, due to the iceberg that is sky-high inflation, the energy crisis and sharply rising mortgage payments. Unfortunately, the captain, our Chancellor, seems totally oblivious to the obvious danger ahead.”