UK economy unexpectedly shrinks in August

The UK economy unexpectedly shrank in August for the first time in two months, according to official data.

The surprise 0.3% drop came after the economy grew 0.1% in July, according to the Office for National Statistics, raising the risk of a recession.

Analysts had expected economic growth to stall as businesses and households face soaring costs.

The Bank of England has warned the UK will fall into recession towards the end of the year.

A recession is defined as two consecutive quarters, or three-month periods, of shrinking economic output. In the three months to August, the UK economy also fell by 0.3% compared with the three months to May 2022.

The drop in the monthly figure was driven by a sharp decline in manufacturers and maintenance work which slowed down the oil and gas sector, the Office for National Statistics said.

"The economy shrank in August with both production and services falling back, and with a small downward revision to July's growth the economy contracted in the last three months as a whole," ONS Chief Economist Grant Fitzner said.

Mr Fitzner added that lots of other customer-facing businesses like retail, hairdressers and hotels were "faring relatively poorly".