Speaking to the Financial Times on 6 September, Chris Williamson, chief business economist at S&P Global Market Intelligence, said the figures showed that then new UK prime minister Liz Truss would be “dealing with an economy that is facing a heightened risk of recession, a deteriorating labour market and persistent elevated price pressures linked to the soaring cost of energy”. The index has come in below 50 – the mark separating contraction and expansion – for the third straight month. The reading came in at 46.2 for October, down from 48.4 in September – the lowest point in 29 months. “There has been a continued slowing in the underlying three-month on three-month growth, where GDP also fell by 0.3% in the three months to August compared with the three months to May 2022,” the ONS said.ĭata from the flash October Purchasing Managers’ Index (PMI) confirmed that the UK economy has lost its momentum. However, following his resignation on 14 October 2022 he was replaced by Jeremy Hunt, who scrapped proposed tax cuts and reinstated a planned rise in corporation tax from 19% to 25% for companies earning more than £50,000 in profits.Īccording to the latest figures from the Office of National Statistics ( ONS), the UK economy is estimated to have shrunk by 0.3% in August 2022, following modest growth of 0.2% in July. Former Chancellor of the Exchequer Kwasi Kwarteng had vowed to stick with his tax-cutting drive, prompting warnings that the UK was entering a currency crisis. Sterling fell as the outlook for the UK economy deteriorates amid rising inflation fuelled by sanctions on Russia, which have pushed up energy prices, and the aftermath of Covid-era quantitative easing. The brutal sell-off in UK government debt may have come in the context of rising yields across the globe, but it largely reflected financial markets getting increasingly concerned about the direction of UK macroeconomic policy.” “Nothing in gilt markets in the past 35 years – not the UK’s ejection from the Exchange Rate Mechanism, 9/11, the financial crisis, Brexit, Covid or any Bank of England move – compares with the price moves in reaction to the chancellor’s mini-budget. US30 US Wall Street 30 (USA 30, Dow Jones)
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