The UK economy shrank 0.3% in August for the first time in two months.which increases the likelihood that the country has entered recession in the third quarter of 2023. Recoil driven by a strong decline in manufacturing and a small contraction in services, reports the Office for National Statistics.

With this data, it is very likely that the UK economy will enter a recession in the third quarter. GDP must grow by 1.1% in September to recover from the fall in August, something economists (shocked by the fall in July) saw as impossible because of the extra holiday announced by Queen Elizabeth II’s death. Most experts believe the economy fell sharply last month, reports elEconomista.es.

The data is a new blow to the conservative cabinet, whose economic plans are highly questionable. Many analysts have lowered their confidence in the growth outlook, falling to pandemic lows, as households and businesses struggle with rising prices.

The most widely held estimate is that It won’t be until 2024 when the UK economy recovers to pre-health crisis levels. August data only strengthens the prediction.

sector

The fall in the UK economy in August came after a 0.1% gain in July, which had been revised down from 0.2%. Thus, the accumulated decline in the previous three months represents 0.3% compared to the three months before May.

By sector, services fell 0.1% in Augustwith specific incidences in health (-1.3%) and arts, entertainment and leisure (-5%), and partially offset by a 1.2% increase in scientific and technical activities.

Construction grew by 0.4%, increased 0.1% recorded in July, driven by a 1.9% increase in new construction, while repairs and maintenance decreased by 2 percent monthly.

Liz Truss’ new government defended, through its Minister of Economy, Kwasi Kwarteng, that its growth plan, which will be detailed on October 31, “will overcome challenges” by “Ambitious reforms and tax cuts, which will grow the economy, create more high-paying, skilled jobs and raise living standards.”

Intervention

But these claims seem to be overshadowed by the data. GDP data adds to yesterday’s shock causedhe lowered the country’s unemployment to its lowest level since 1974 in September. An evolution explained by the continuous increase in the number of people out of work or looking for work, mainly because they suffer from long-term illnesses, according to the statistical office.

Many analysts attribute it directly to the deterioration of healthcare and add to the argument that the controversial tax cut plans promised by Truss have earned him a historic rebuke from the International Monetary Fund (IMF).

The impact of the plans has been such that they have forced the Bank of England to intervene immediately to avoid the collapse of the pension fund.