Recession risk rises as economy unexpectedly shrinks

The UK economy unexpectedly shrank in August, strengthening predictions that it will fall into a recession.

The surprise 0.3% drop came as factories and consumer-facing businesses struggled, according to official figures.

Prices are rising at their fastest rate for 40 years, eating into people's budgets, and outpacing growth in pay.

The latest data from the Office for National Statistics (ONS) means that in the three months to August, GDP also fell by 0.3%.

Yael Selfin, Chief Economist at KPMG, said that the UK was now "teetering on the edge of recession".

"August's drop in GDP likely marks the start of a downward trend that will continue deep into next year," said Samuel Tombs Chief UK Economist at Pantheon Macroeconomics.

Suren Thiru, Economics Director for ICAEW, Countries around the world are facing challenges right now, particularly as a result of high energy prices driven by Putin's barbaric action in Ukraine."