Britain is heading to record a new economic recession during the fourth quarter of this year, after the release of the business sector data that showed the stalling of economic growth during the month of October, following the announcement of the second lockdown due to the second wave of Corona pandemic.
UK Services PMI in October fell to a four-month low of 51.4, after the September reading was at 56.1, while the preliminary reading was at 52.3.
Also, the composite PMI reading including both manufacturing and services sectors decreased in October to 52.1, while the previous reading was 56.5.
The data indicated that the services sector in Britain, which represents the basis of the economy, was about to stop in October even before the adoption of the second closure due to the Corona pandemic, and that this pushes the economy to record a double recession during the fourth quarter, making the path of recovery difficult during 2021.
British companies continued to shed jobs for an eighth month in a row, and new demands in the service sector fell sharply.
Starting from Thursday, all non-essential stores, bars and restaurants in Britain will close for four weeks, except for places where takeaway is served. Although the restrictions are less broad than they were in March and April, some economists expect production to fall in November by as much as 10%, which will reduce production in the fourth quarter by about 3%.
Britain's GDP fell 20% during the longest lockdown in the second quarter of 2020, the largest drop of any advanced economy. While the BoE appears to be ready to launch another round of bond purchases at its meeting on Thursday and cut its economic forecasts from those it made in August, it expected GDP to return to pre-crisis levels by the end of 2021.
As for the pound sterling, it fell today against the US dollar after hitting its highest level in more than a week, and this fluctuation in its performance comes due to the appearance of the preliminary results of the US presidential elections, which raised volatility as the contest between candidates remains tight.
The pound sterling recorded a high of 1.3139 versus the US dollar today, after opening today's trading at 1.3051, and is currently trading at the level of 1.2974, while it recorded the lowest level at 1.2913.