UK economic output was weaker than expected, falling by 0.3% month-on-month in August and taking GDP to its lowest level since the end of last year. In the opinion of economists at Nomura, the third quarter is set to mark the start of the UK’s recession.

Further GDP decline looks likely in September

“With output likely to have been weakened materially in September on account of the additional bank holiday for the Queen’s funeral, another negative print in September would mean a chunky fall in GDP during the quarter as a whole.

“The longer market volatility remains, the greater the risk that this pulls output down further, and that ultimately means the recession could end up being worse, due to a combination of higher interest rates facing the real economy and weaker sentiment (we currently foresee a 2% fall in GDP from peak to trough).”

See: No sustainable GBP recovery in sight – Commerzbank