Gross Domestic Product (GDP) contracted by 0.3 percent in August official data showed today. The figures have caused fresh concern the UK is “sliding towards” a recession.
Jeremy Batstone-Carr, European Strategist at Raymond James said the news won’t come as a surprise to many.
He said: “For all the talk of warding off the ‘anti-growth coalition’, the ONS today confirmed that expansion of the UK economy has officially slowed to a crawl.
“Gross Domestic Product (GDP) fell by 0.3 percent in August as financial uncertainty, sluggish retail sales, and high energy prices constrained economic activity.
“With the extra bank holiday for the Queen’s funeral likely to further impact outputs in September, it seems increasingly probable that the UK is sliding towards a recession.”
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Tom Stevenson, investment director for Personal Investing at Fidelity International said several crises are unfolding at the same time, all of which stem from the soaring cost of energy.
“It is the unsustainable cost of heating our homes and filling our cars that has led to an apparently unsustainable policy of borrowing heavily to combine fiscal support and tax cuts.
“Both the Bank of England and the markets have voted with their feet. The big concern for investors is the demand destruction that soaring prices, rising mortgage rates and pension fears is triggering.
“The rollover of fixed term loans over the next year or so is going to put many households in difficulty. This process has barely begun and if recession is accompanied by a housing slump, businesses and households will face a very tough couple of years.”
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Jonathan Moyes, Head of Investment Research, Wealth Club said the data points to a “chill in the air”.
He said: “It was hard to find many positives in the data, although the construction sector continues to be an area of strength.
“With a significant tightening of financial conditions through September and October, there is certainly a chill in the air. We expect this release to be a sign of the winter to come.
“The market’s attention will remain firmly fixed on both the Chancellor and the Bank of England as they look to restore confidence and stabilise the government bond market.”
Wealth club analysis shows:
• GDP Growth for August of -0.3 percent.
• July 2022 GDP growth was revised down to 0.1 percent (from 0.2 percent).
• Over three months to August, GDP fell 0.3 percent.
• UK GDP is now 0.5 percent above its pre-coronavirus level in 2019.
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