Drop in Business Activity Flags UK Recession Risk - Flash PMI

British private-sector economic activity fell at its fastest rate in two years in January, a survey showed on Tuesday, as businesses blamed higher Bank of England interest rates, strikes and weak consumer demand for the slowdown, Reuters reported. The S&P Global/CIPS flash composite Purchasing Managers' Index (PMI) dropped to 47.8 from 49.0 in December, at the bottom end of economists' forecasts in a Reuters poll and the lowest since January 2021. Readings below 50 indicate falling output. The fall contrasted with a slight rise in business activity in the euro zone. "Weaker-than-expected PMI numbers in January underscore the risk of the UK slipping into recession," S&P Global's Chief Business Economist, Chris Williamson, said. "Industrial disputes, staff shortages, export losses, the rising cost of living and higher interest rates all meant the rate of economic decline gathered pace again at the start of the year," he added. Britain's economy grew in November, according to official data published earlier this month, reducing the chances of two consecutive quarters of falling output - the widely used definition of recession in Europe - in the second half of 2022. However, a widely expected fall in output this year will weigh on the BoE's Monetary Policy Committee (MPC) as it considers how much further to raise interest rates on Feb. 2. Read more.