Commenting on today’s GDP report (August), Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:

The 0.3% m/m fall in GDP in August is a continuation of weakness in activity since the end of last year. In fact, UK GDP is at the same level as last December, and 0.9% below where it was in May. Consumer-facing sectors, such as retail and hospitality, are faring the worst - probably due to households reining in their spending due to the cost-of-living crisis. Yesterday’s labour market data is largely showing the jobs market performing strongly, with the unemployment rate a 48-year low, vacancy levels still high but wage growth failing to keep up with inflation.

High inflation and the extent to which borrowing costs rise will determine whether we have a mild or deep recession – or if we avoid one altogether. To achieve the latter depends on our policymakers and how they manage the recent volatility in the financial markets. One way is perhaps bring forward the Medium-Term Fiscal Plan from 31st October - this could help calm nerves and reassure markets the government has a sustainable fiscal plan. The alternative is to allow the uncertainty to continue, which will not help anyone.