(CercleFinance.com) – Weighed down by the political crisis rocking the country, the UK economy in October suffered its sharpest contraction since the start of 2021, according to the first results of the monthly S&P Global/CIPS survey of purchasing managers.
The ‘Flash’ PMI for the services sector, the main engine of the UK economy and a rare support for activity, fell to 47.5 this month from 50 in September.
The manufacturing PMI fell to 45.8 from 48.4 last month, a new low in nearly two and a half years.
The composite ‘flash’ index – which combines services and manufacturing – stood at 47.2 in October, compared with 49.1 the previous month.
In its study, S&P Global explains that the current PMI levels describe a situation of recession in the UK, exacerbated by the climate of political crisis, which has caused the pound to fall, bond yields to rise and volatility to worsen.
“Increased political and economic uncertainty has led to a decline in activity not seen since the financial crisis of 2009, except for periods of lockdown during the pandemic,” notes S&P Global Market Intelligence Chief Economist Chris Williamson.
“GDP is therefore very likely to fall in the fourth quarter after a likely contraction in the third, meaning the UK is already in recession,” he concludes.