Recession looming in UK and Europe as cost of living squeeze hits services sector but car sales lift economy
Global recession fears mounted yesterday as the cost of living squeeze took its toll on firms across the services sector.
Surveys showed the dominant sector – ranging from bars and hotels to solicitors and accountants – shrank again last month in the UK, the eurozone and the US.
In Britain, GDP looks on course to contract by 0.4 per cent in the final quarter of the year after a 0.2 per cent setback in the third quarter, according to the purchasing managers’ index (PMI) data.
Slump: The services sector – ranging from bars and hotels to solicitors and accountants – shrank again last month in the UK, the eurozone and the US
That would mean Britain is in recession, which is defined as two consecutive quarters of decline.
‘This is the toughest spell the UK economy has faced since the global financial crisis excluding only the height of the pandemic,’ said Chris Williamson of S&P Global Market Intelligence, which compiled the survey.
The index recorded a 48.8 reading in November – where 50 marks the cut-off between growth and contraction. That was unchanged since October and the second month in a row of decline.
Firms pointed to ‘caution amongst businesses and belt- tightening amongst households in the face of continued cost of living challenges’, though confidence had ‘improved somewhat’ since the chaos of September’s mini-Budget.
Sales of new cars rose by 23.5 per cent last month compared with a year earlier in a much-needed boost for the economy.
The Society of Motor Manufacturers and Traders (SMMT) said 142,889 new cars were registered in November.
There was strong demand for company cars and electric vehicles. However, that was still 8.8 per cent below pre-pandemic levels in 2019.
SMMT chief executive Mike Hawes said ‘urgent measures’ were needed to boost the switch to electric vehicles and investment in a charging network.
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