Is Britain heading for a painful recession?

Given how inflation has taken off and sent real incomes into steep decline it is remarkable that Britain is not already in recession. It seemed that we were heading that way – until the Office for National Statistics revised upwards economic growth in the second quarter of this year from minus 0.1 per cent to plus 0.2 per cent. The economy then shrank by 0.3 per cent in August. But the definition of a recession is two quarters of negative growth – so Britain cannot be classed as being in one until growth figures for the fourth quarter are published in January.

But the S&P Global Purchasing Managers’ Index (PMI) published today suggests that when it does finally arrive, the recession will be deep and painful. A PMI – a concept which is calculated and published by several organisations – is a leading indicator of economic growth. It is compiled from data submitted by businesses on whether their activity is rising or falling.