The UK is likely to go into recession soon. This is because the British economy contracted unexpectedly in August. The Germans are also expecting a contraction, but not until next year.
A country enters a recession when the economy has contracted for two consecutive quarters. In the UK it’s almost time. In August and in the months before, the economy contracted. To avoid a recession, the British economy must have grown by at least 1.1 percent last month.
Figures for September are not yet available, but last month’s growth looks unlikely. Due to the death of Queen Elizabeth, the British had an extra day off. Additionally, many households may have kept their pockets tight due to rising inflation. That encourages contraction.
If the UK falls into recession, it will be the first major European economy to experience it. More can follow later. For example, German Finance Minister Robert Habeck said Wednesday that the economy of Europe’s biggest eastern neighbors is likely to contract 0.4 percent next year.
According to him, this is due to the Russian invasion of Ukraine. This means, among other things, more expensive energy, which also makes other goods and services more expensive. As a result, households can buy less with their money.
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