UK economy showing signs of recession

The British economy is showing signs of slipping into recession as data showed it unexpectedly contracted in August, underscoring Prime Minister Liz Truss’s challenge to deliver on her promises to accelerate growth.

Weakness in the manufacturing sector and maintenance work on North Sea oil and gas fields contributed to a 0.3% drop in UK Gross Domestic Product (GDP) from July.

For its part, the manufacturing industry reported a drop of 1.6% compared to July, and a more than unusual maintenance in the North Sea affected the mining and quarrying sector, which includes oil and gas.

Truss sticks to his plan

Meanwhile, the British government said it will not reverse its vast tax cuts or reduce public spending, in an attempt to hold its own against renewed turmoil in financial markets and concerns about its change in economic policy.

“What we will do is make sure that in the medium term the debt decreases, but we will not do it by cutting public spending, but by making sure that we spend public money well,” Truss said in Parliament.

The Institute for Fiscal Studies said the strategy would require 62 billion pounds in spending cuts or tax increases to stem the growth of public debt, a daunting proposition after more than a decade of tight spending.