: U.K. troubles grow as economy sees surprise slowdown in August

by | Oct 12, 2022 | Stock Market

The U.K. economy saw a surprising contraction in August that’s likely to increase worries about a recession, as the country teeters on the edge of a financial crisis. Gross domestic product fell by 0.3% in August 2022, following growth of 0.1% in July, which was revised down from expansion of 0.2%, the Office for National Statistics reported Wednesday. In the three months to August, GDP also fell by 0.3%.

The statistics agency said monthly GDP is now estimated to be at the same level as its pre-coronavirus levels in February 2020. The main contributor to the lackluster August number was a 1.8% annual drop in production, which followed a 1.1% drop in July — revised down from a decline of 0.3%. Services slipped by 0.1%, following growth of 0.3% in July — revised down from 0.4% growth. Construction grew 0.4% in August and output in consumer-related services fell by 1.8%. The data comes on the heels of an International Monetary Fund prediction that the U.K. economy will grow just 0.3% in 2023, a prediction that puts it at the bottom rung of major developed countries. That compares to expectations of 3.7% growth this year. Read: Global economy most vulnerable since COVID crisis, with housing market at potential ‘tipping point,’ IMF warns Pierre-Olivier Gourinchas, the IMF’s economic counselor, was particularly critical of the government’s unfunded tax cuts announced last month that have roiled financial markets. He urged Prime Minister Liz Truss and Chancellor Kwasi Kwarteng to align their tax-cutting goa …

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