UK policymakers are on high alert for a possible recession as soaring interest rates have led to a sharp decline in factory output and the largest annual decrease in house prices since the global financial crisis of the late 2000s.
With mounting evidence that the Bank of England's 14 consecutive rate hikes have been slowing down the economy, both manufacturing and the property market are indicating a challenging winter ahead. A joint report by S&P Global and the Chartered Institute of Procurement & Supply (CIPS) has revealed that the prospects for the UK's industrial sector are among the bleakest seen outside of financial crises and the Covid-19 pandemic.
Simultaneously, the Nationwide Building Society, one of the UK's largest mortgage lenders, reported a 5.3% year-on-year drop in house prices in August, marking the swiftest annual decline since 2009.
Revised growth figures by the Office for National Statistics, however, revealed a faster and stronger post-COVID economic rebound, with the 2021 economy ending 0.6% larger than its pre-pandemic level, instead of the previously estimated 1.2% contraction.
Despite the rebound, concerns in different sectors of the economy will pose a challenge for the Bank of England as it considers another interest rate increase at its upcoming monetary policy committee meeting this month.