The economy shrank by 0.3 per cent in August raising new fears of an imminent recession.
GDP fell more sharply than expected during the month, figures from the Office for National Statistics (ONS) showed.
Most analysts had been expecting output to remain flat in August. It means that the economy is likely to have shrunk during the third quarter as a whole as September’s output will have been depressed by the extra Bank Holiday for the Queen’s funeral.
The latest fall comes after growth of just 0.1 per cent in July. This was revised down from an initial estimate of 0.2 per cent.
ONS chief Economist Grant Fitzner said: “The economy shrank in August with both production and services falling back, and with a small downward revision to July’s growth the economy contracted in the last three months as a whole.
“Oil and gas production fell as more scheduled North Sea summer maintenance took place than usual. Notable decreases were also seen across much of manufacturing.
“Health also contributed to the decline, with a drop in the number of hospital consultations and operations.
“Sports events too had a slower month after a strong July and many other consumer-facing services struggled with retail, hairdressers and hotels all faring relatively poorly.
“On the positive side, these falls were partially offset by stronger than usual summer performance from many professional services such as lawyers, accountants and architects.”
Chancellor of the Exchequer Kwasi Kwarteng said: “Countries around the world are facing challenges right now, particularly as a result of high energy prices driven by Putin’s barbaric action in Ukraine.
“That is why this government acted quickly to put in place a comprehensive plan to protect families and businesses from soaring energy bills this winter.
“Our Growth Plan will address the challenges that we face with ambitious supply-side reforms and tax cuts, which will grow our economy, create more well-paid skilled jobs and in turn raise living standards for everyone.”
Shadow Chancellor Rachel Reeves said: “The facts speak for themselves. Mortgage costs are soaring leaving families worrying about making ends meet. Borrowing costs are up. Living standards down. And we are forecast to have the lowest growth in the G7 over the next two years.
“That the IMF yesterday described the ‘UK like a car with two people each trying to steer the car in a different direction’ leaves us an international laughing stock.
“The Conservatives must reverse their disastrous mini-Budget. Any continued failure to do so shows damaging levels of denial from the Prime Minister and her Chancellor.”
