UK economy rebounds slightly in August amid global inflation scrutiny

The UK economy experienced a mild recovery in August with a 0.2% growth, following a 0.5% contraction in July, according to data from the Office for National Statistics (ONS) released on Thursday. This rebound is attributed to disruptive industrial action within the NHS and railway sectors, as well as adverse weather conditions that affected the July figures.

Simultaneously, inflation in the UK cooled down unexpectedly to 6.7% in August. The Bank of England responded by maintaining its interest rate steady at 5.25%, after implementing 14 consecutive hikes aimed at achieving a 2% inflation target. Despite this, the bank issued warnings about the impending effects of increased borrowing.

RBC Capital Markets expressed concerns over the ongoing strikes and their potential impact on the August figures. Meanwhile, AJ Bell underscored the looming recession risks due to high borrowing costs and soaring prices exerting pressure on businesses and consumers.

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