UK set to avoid recession despite poor August

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The UK’s economy is expected to avoid a recession despite new figures showing a surprise contraction in August.

The economy shrank by 0.1% during the month, the Office for National Statistics (ONS) said, but growth in July was revised upwards to 0.4%.

In the three months to the end of August the economy grew 0.3%, indicating a recession can be avoided.

The ONS said weakness in the manufacturing sector was offset by buoyant TV and film production.

“Services provided [the] majority of the growth over the three months, with production and manufacturing falling back,” said Rob Kent-Smith, head of GDP at the ONS.

The growth figures are being watched closely for signs of recession – defined as two consecutive quarters of contraction – after the economy shrank in the second quarter for the first time since 2012.

The next quarter runs until the end of October so the August data is the second month in the third quarter.

The contraction during August, is not, however, expected to indicate a recession is looming.

Reuters reported that the ONS said the economy would have to contract by an unusually large 1.5% in September for this happen.

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