Businesses will need to be reassured by the Chancellor’s fiscal statement on 31 October after the UK’s GDP dropped in August, the Confederation of British Industry (CBI) has said.
The UK economy shrank in August, falling by 0.3%, according to the latest data from the Office for National Statistics (ONS).
The drop came after the economy grew 0.1% in July, said the ONS. Analysts had expected economic growth to stall as businesses and households struggle with soaring prices.
The Bank of England has warned the UK will fall into recession towards the end of the year.
Ben Jones, Lead Economist at the CBI, said: ‘The UK economy retreated in August. And business surveys, including our own, have turned sharply downwards since the summer and there is an increasing chance that the UK entered a downturn during the third quarter.
‘Ongoing supply challenges, sharp rises in energy prices and a tight labour market mean businesses continue to face significant cost pressures.’