Incoming PM Sunak inherits UK economy in crisis

GBNEWS24DESK//

Britain’s next prime minister, set to be former finance minister Rishi Sunak, inherits a UK economy that was headed for recession even before the recent turmoil triggered by Liz Truss.

Outgoing Prime Minister Truss resigned after her budget of tax cuts funded by debt sent shockwaves through markets, crashing the pound.

New Conservative Party leader and incoming UK prime minister Rishi Sunak (C) waves as he arrives at Conservative Party Headquarters in central London having been announced as the winner of the Conservative Party leadership contest, yesterday. Photo: AFP

That caused the government to U-turn on most of its budget, including scaling back a cap on soaring energy bills that have contributed heavily to a cost-of-living crisis for tens of millions of Britons.

Data showed yesterday Britain’s economic downturn has worsened in October, with private-sector output at a 21-month low.

“October’s flash PMI data showed the pace of economic decline gathering momentum after the recent political and financial market upheavals,” noted Chris Williamson, chief business economist at S&P Global Market Intelligence that helped compile the figures.

“The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded.”

Williamson added that upcoming data would likely show Britain already in recession. The S&P Global/ CIPS flash UK composite purchasing managers index stood at 47.2 in October, below September’s level of 49.1. A figure under 50 indicates a contraction.