UK economy shrinks as economists warn of more pain to come

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London, Nov.11 (BNA): Britain’s economy shrank in the three months to September, official statistics said Friday, as forecasters warned of many months of contraction to come.

The Office for National Statistics said gross domestic product fell by 0.2% between July and September, a smaller-than-expected contraction that nevertheless is seen to signal the start of a long recession.

GDP shrank by 0.6% in September, and by 0.1% in August, the statistics office said.

It said a decline in manufacturing output and an extra holiday to mark the death of Queen Elizabeth II, which contributed to “a notable fall in retail,” were behind the decline.

It said the U.K. economy is now 0.2% smaller than in February 2020, just before the COVID-19 pandemic shut down big chunks of the economy for months.

The Bank of England hiked its main interest rate last week by three quarters of a percentage point, to 3% — its biggest increase in three decades, reports AP.

The central bank said the move was needed to beat back stubbornly high inflation that is eroding living standards and is likely to trigger a “prolonged” recession.

AHN