The newest financial development figures have renewed considerations the UK financial system is weak and will fall into recession.

The UK financial system contracted 0.5 % in July though GDP elevated 0.2 % within the three months to July 2023.

Matthew Lesh, director of Public Policy and Communications on the Institute of Economic Affairs, informed Express.co.uk: “The UK has been teetering on the edge of a recession for much of this year, and the latest GDP figures give little reassurance.

“We are also facing a slowing labour market, a similar predicament in the Eurozone and China’s economic weakness pulling down the global economy.

“A recession would mean falling inflation but also likely more people losing their jobs and lower wages.”

Mr Lesh stated the UK is unlikely to fall right into a technical recession at this level which might require two consecutive quarters of unfavourable financial development.

He added: “But this anaemic growth is hardly reassuring given Britain’s long-running stagnant wages and living standards.”

However, chief economist Paul Dales warned a light recession might have already got begun.

He stated: “The decline in GDP in July suggests that underlying growth has lost momentum since earlier in the year.

“Some of the weakness was due to there being almost twice as many working days lost to strikes in July (281,000) than in June (160,000).

“That contributed to the 2.1 percent month on month and 1.1 percent month on month respective falls in health and education output.”

He stated current moist climate additionally impacted the development sector which had a 0.5 % month on month decline.

Sam Miley, managing economist for the Centre for Economics and Business Research (Cebr), stated the close to time period outlook for the UK “remains weak”.

He stated: “The economy continues to face a number of headwinds, including elevated inflation and tighter interest rates, which are hindering its growth prospects.

“The tighter interest rate environment is becoming particularly important for the growth outlook, adversely affecting the economy through a number of channels, including increasing borrowing costs and mortgage rates for households and discouraging investment amongst businesses.”

The Cebr is predicting the financial system will expertise a light recession throughout the fourth quarter of 2023 and the primary quarter of 2024.

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