UK’s economic downturn slowed slightly in November, new figures show

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The UK economic slowdown eased in November as private sector activity edged up slightly from the previous 21-month low, according to new data.

The influential UK S&P Global/CIPS flash PMI showed a value of 48.3 in October compared to 48.2 a month earlier.

Any reading below 50 is considered a downturn in the economy. The index has now scored less than 50 points for four consecutive months.

The figures, based on a preliminary reading of the data, showed that production helped lift the index slightly off its recent lows.

The revision comes after new forecasts suggest that the UK will sit last in the rankings of the largest economies for the next two years in a row.

The Organization for Economic Co-operation and Development (OECD) conclusion came after Prime Minister Rishi Sunak warned his cabinet of a harsh winter ahead due to soaring inflation, threats of strikes and growing NHS waiting lists.

Chris Williamson, Chief Business Economist at S&P, said: “Another sharp drop in business activity in November reinforces signs that the UK is in recession and GDP is likely to fall for the second consecutive quarter in the final months of 2022.

“Excluding months of pandemic lockdown, the fourth-quarter PMI now signals the sharpest economic downturn since the height of the global financial crisis in the first quarter of 2009, corresponding to a quarterly contraction of the economy of 0.4%. “.

But the worst is yet to come, Mr. Williamson warned, as the downturn is likely to deepen into the new year. The number of new orders received by businesses during the month fell to a nearly two-year low.

S&P reported a further sharp drop in business activity in November.

This was partly due to a reduction in new orders from abroad, which affected the November order books, especially in the manufacturing sector.

The companies said Brexit and the weak global economy were taking a toll on their exports as orders manufacturers sent to foreign customers fell by the most since May 2020.

For suppliers, the problems have been somewhat offset as the pound’s depreciation against the dollar led to higher orders from the US.

CIPS Chief Economist John Glen said: “The survey pointed to some deeply troubling developments such as the fastest drop in new orders since January 2021 and the fastest decline in manufacturing export orders since 2009 outside of the pandemic.

“The Covid veil, which has now been almost completely lifted, has exposed the challenges exporters still face, struggling with customs and paperwork, and other Brexit restrictions that are alienating overseas customers.”

The UK outlook has been sharply worsened by the OECD, which predicts GDP will contract by 0.4% in 2023 and grow by just 0.2% in 2024. Back in September, the UK economy was expected to remain flat next year.

It also says the UK will be vulnerable to power outages in the coming months and warns: “A particularly cold winter could lead to supply disruptions, which could lead to permanent power outages in the economy.”

Pat McFadden blamed the Conservative Party for 12 years of economic failure

Labor Department spokesman Pat McFadden said the numbers showed the UK was the only one of 38 OECD countries whose economies were not expected to return to pre-crisis levels by 2024.

The bi-annual Economic Outlook report shows the UK trailing all G7 countries in 2023 and 2024, while its GDP outlook was worse than any member of the larger G20 except Sweden and Russia, which fell under sanctions. 5.6% next year.

“Today’s OECD data is further evidence of the Tories’ 12-year economic collapse,” Mr. McFadden said.

“This is the fatal noose of the Tories. A low growth spiral leads to higher taxes, lower investment, lower wages and poor public services. And they don’t have any plan to get us out of it.”

The OECD has blamed labor shortages and ‘untargeted’ energy support on painful UK inflation, which is projected to peak later this year around its current level of 11.1% and remain above 9% in early 2023 before declining up to 4.5%. percent by the end of next year and 2.7 percent in 2024.

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