What's going on?

Data released on Thursday showed the UK economy shrank by 0.1% in August compared to July � but upward revisions to earlier data suggest the country has managed to avoid a recession. Cracking news, lad (tweet this).

What does this mean?

Economists had predicted that the British economy in August would be the same size as in July, so the shrinkage � although slight � was likely a disappointment. But Thursday�s update also showed economic growth in June and July was higher than initially measured, partly thanks to refreshed (and more accurate) readings from the all-important services industry.


The British economy shrank in the second quarter of this year. But July�s higher growth has offset August�s decline � and barring a dramatic collapse in September, third-quarter economic growth is all but guaranteed for the UK. That�ll be a relief for investors: if the economy shrank this time around, it would�ve technically been in a dreaded recession.

Why should I care?

For markets: A grand day out.

The value of the British pound rose against the US dollar on Thursday, but � fortunately for existing UK stock market investors � perhaps not by enough to turn foreign investors off British stocks (which also rose slightly). Typically, a more expensive currency might dissuade international buyers, given that their cash doesn�t go as far. But now there�s no immediate recession in the offing, British companies may have had a better third quarter than expected.

The bigger picture: The curse of the were-Brexit.

A relatively muted investor reaction to Thursday�s release suggests they�re waiting on economy-shaping Brexit updates before committing to anything. First-quarter economic growth got a boost from companies that stockpiled goods before the UK�s planned-then-postponed March exit from the European Union. But a lack of repeat purchases then shrank the second quarter. The UK�s trade terms with Europe, likewise, will affect companies� manufacturing, purchasing, and hiring decisions � in turn driving their earnings and the economy as a whole.