Manufacturing contractions unexpectedly weigh on the UK economy.
Against July’s modicum of growth of 0.1% in GDP, the UK economy contracted an unexpected 0.3% in August, driven by a deep contraction of 1.6% in manufacturing. This was unexpected in the sense that the markets, perhaps a little too optimistically, expected zero growth in the month. This decline likely heralds the start of a more protracted downturn – expectations of the UK avoiding a recession were low and Q3 GDP 2022 will be the official starting point one would posit. Prime Minister Liz Truss’ “growth, growth, growth” mantra is already facing difficulties – the only thing that continues to grow is the expectation of higher rates from the Bank of England and higher accompanying inflation. When things go wrong, they go wrong in a whole host of ways and the UK can’t seem to catch a break at the moment.
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