Britain's Economy Could Be Falling Into Recession As Energy Prices Spiral

5th September 2022

The UK economy shrank in August, in a sign that Britain's economy could be falling into recession as energy prices spiral.

The composite Purchasing Managers' Index (PMI), which covers UK service firms and factories, has fallen into contraction territory, due to a "severe and accelerated drop in UK manufacturing output" and a slowdown in the services sector.

The index, a gauge of activity, has dropped to 49.6, from 52.1 in July, and weaker than the ‘flash' reading of 50.9 taken during August.

This is the first reading below 50 (showing a contraction) in 18 months, when firms were suffering from Covid-19 lockdowns.

The report found that demand for consumer-facing services such as restaurants, hotels, travel and other recreational activities is collapsing, as the cost of living crisis forces consumers to cut back.

Business confidence has slumped, with businesses reporting a drop in new orders - including the biggest drop in export demand since January 2021.

Source - https://www.theguardian.com/business/live/2022/sep/05/euro-low-sterling-gas-prices-russia-shutdown-opec-markets-business-live