Brexit-facing UK economy shrinks but set to avoid recession

Brexit-facing UK economy shrinks but set to avoid recession

Britain’s Brexit-facing economy shrank in August, official data showed Thursday, but analysts say a better-than-expected July is expected to help it avoid recession.

Gross domestic product — the combined value of all goods and services produced in the economy — slid 0.1 percent in August from July, the Office for National Statistics said in a statement.

That contrasted however with upwardly-revised monthly expansion of 0.4 percent in July.

Sterling barely budged on the August reading, which was only moderately worse than market expectations of zero growth.

And the ONS also revealed Thursday that the economy grew 0.3 percent in the three months to August compared with the previous quarter.

“The most recent GDP readings from the UK have shown a contraction in month-on-month terms — but taking a step back and looking at the bigger picture, it does not appear quite so bad,” noted XTB analyst David Cheetham.

He added: “Following the contraction seen in the second quarter, this means that another negative reading for the third quarter is not at all likely, although growth remains tepid at best.”

Recent ONS data showed the economy contracted by 0.2 percent in the second quarter.

A third-quarter drop would therefore place the economy in a technical recession.

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