Recession looms in UK and Europe as cost of living squeeze hits service sector but car sales boost economy
Fears of a global recession rose yesterday as the cost of living squeeze took its toll on businesses in the service sector.
Surveys have shown that the dominant sector – ranging from bars and hotels to lawyers and accountants – shrank further last month in the UK, eurozone and US.
In Britain, GDP is expected to contract by 0.4% in the last quarter of the year after a 0.2% decline in the third quarter, according to data from the Purchasing Managers’ Index (PMI).
Crisis: The services sector – ranging from bars and hotels to lawyers and accountants – contracted further last month in the UK, eurozone and US
This would mean Britain is in recession, defined as two consecutive quarters of decline.
“This is the toughest period the UK economy has faced since the global financial crisis, excluding only the peak of the pandemic,” said Chris Williamson of S&P Global Market Intelligence, who reported. compiled the survey.
The index registered a reading of 48.8 in November – where 50 marks the cutoff between growth and contraction. It was unchanged since October and the second consecutive month of decline.
Firms pointed to “cautiousness among businesses and belt-tightening among households in the face of continuing cost-of-living challenges”, although confidence has “improved somewhat” since September’s mini-budget chaos .
New car sales rose 23.5% last month from a year earlier, giving the economy a much-needed boost.
The Society of Motor Manufacturers and Traders (SMMT) said 142,889 new cars were registered in November.
Demand for company cars and electric vehicles was strong. However, this figure was still 8.8% lower than pre-pandemic levels in 2019.
SMMT chief executive Mike Hawes said “urgent action” was needed to boost the switch to electric vehicles and investment in a charging network.