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Britain not in recession yet, ONS reveals as pound recovers from mini-Budget plunge - live updates - THE TELEGRAPH
- Eurozone facing 'severe risks' to financial stability, admits ECB
The FTSE 100 closed down 1.77pc at 6,881.59
The Dow Jones closed down 1.54pc at 29,225.61
Ben Marlow: There is a ticking timebomb under the financial system
The pound recovered all of its losses since Kwasi Kwarteng's mini-Budget this morning as Britain's official forecaster admitted it was mistaken about the country entering a recession in the second quarter.
Sterling rose to $1.116 against the dollar, recovering from a low point of just under $1.04 which it touched at the peak of the market’s gloom on Monday morning.
It came as the Office for National Statistics revealed the economy grew by 0.2pc in the second quarter, rather than the previous estimate of a 0.1pc fall in GDP.
A recession is usually defined as two consecutive quarters of contraction.
It is now thought likely that a contraction began in the third quarter of 2022 instead.
Danni Hewson, a financial analyst at AJ Bell, says the good news of today's GDP figures is largely "offset by the bad":
Despite the end of lockdowns and life returning to somewhat normal, the UK economy has still not recovered its mojo as the only G7 country to have failed to claw its way back above pre-pandemic levels.
And the real test is yet to come. The full extent of sky-high inflation and now increased borrowing costs will only begin to be truly felt in the second half of the year. Even with the government’s energy support package many households will see their bills shoot up, leaving them less cash to pay for any of those discretionary goods and services that help UK Plc soar.
Looking at today’s figures, delivering sustained growth of 2.5pc and above seems an even more difficult task. The new government says it has the right strategy, that it will lay out clearly in November, but judging by the past week two months might seem like a millennia.
