UK economy struggles with recession, survey suggests

The political crisis in the UK that led to the resignation of Prime Minister Liz Truss has been intensifying a downturn in the UK economy and dimming the outlook for businesses. In October, the UK's economy and its activity contracted at its fastest rate in two years, indicating that the country is in a recession amid political uncertainty and extremely high energy and borrowing costs.

UK economy is falling into recession

After the resignation of Prime Minister Liz Truss in the UK, struggling with economic and political crises, the international credit rating agency Moody's has now confirmed the country's credit rating as "Aa3" and changed its rating outlook from "stable" to "negative", unfortunately.

In addition, a measure of private sector activity, S&P Global/CIPS flash UK Purchashing Managers Index, fell to a 21-month low of 47.1 in October from 49.1 in September. This decline was reviewed as "existing contraction". Moreover, some businesses reported a great contraction in activity. 

The pessimistic outlook comes amid domestic political crisis along with Rishi Sunak on the scene to become prime minister following Liz Truss's resignation. The figures show how much it costed for Truss's government to collapse after her plan to cut taxes went wrong and the value of the pound and UK bonds fell. S&P reported that, with the exception of the pandemic, output is now falling at a faster rate than it has since the 2009 global financial crisis. 

Moreover, UK survey which is based on the responses received between October 12 and 20, surfaced that the sharpest decline in new orders since January 2021, reviewed as the deteriorating economic outlook.

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