UK economy on the verge of recession

The UK is likely to fall into recession, as the economy has unexpectedly slowed down in August. For Prime Minister Liz Truss, this fact only makes it more difficult to fulfill the promises she made about accelerating growth.

"Prolonged pressure on household finances is holding back growth and is likely to result in a technical recession of the UK economy in Q3 of this year," said Yael Selfin, chief economist at KPMG UK.

Grant Fitzner, chief economist at the ONS said that the consumer-oriented services sector is in a pretty tough spot right now, with the financial health of barbershops, hotels and retailers in general leaving much to be desired.

The British economy is likely to slow sharply soon as rising inflation is devastating for households and forcing the Bank of England to raise interest rates rapidly, even as economic activity stagnates.

Samuel Tombs, an economist at Pantheon Macroeconomics, reported that about a third of various households no longer have enough to live on in savings, and the 30 percent who have a mortgage are likely to reduce their spending as borrowing costs rise.

Samuel Tombs said that the impact of mortgage refinancing on income, the delays between changes in corporate sentiment and then spending decisions, and all sorts of constraints now facing macro policy, all indicate that the recession will not end until late next year.