Britain’s economy shrank by 0.3% in August from July, hit by a slump in manufacturing and by maintenance work that slowed the oil and gas sector, official data showed.
Giving a strong signal that the UK is entering a recession, the Office for National Statistics said manufacturing declined by 1.6% while the cost of living crisis appeared to hit hotels, restaurants and the leisure industry.
A Reuters poll of economists had pointed to zero growth in August rather than a 0.3% decline.
The decline in gross domestic product (GDP) was also 0.3% over the three months to August, indicating that an increase of 0.1% in July was a blip and mostly caused by a modest rebound from the Queen’s platinum jubilee celebrations.
A rise in housebuilding activity offset a decline in maintenance to leave the construction sector 0.4% larger.
However, the much larger services sector shrank by 0.1% as a result of cuts to health service spending. Output fell by 5% in the arts, entertainment and recreation sector and by 1.8% in the food and accommodation services sector.
A reduction in state spending related to the coronavirus pandemic was also one of the big causes of the slump in manufacturing, which was hit by pharmaceutical companies cutting back production.
Kwasi Kwarteng, the chancellor, blamed the global situation for the decline and especially the war in Ukraine, which has sharply increased energy costs.
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