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UK economic activity contracted at its fastest pace in almost two years in October, suggesting the country has fallen into a recession during a period of political uncertainty and high energy and borrowing costs.

The S&P Global/Cips flash UK composite output index, a measure of activity in the private sector, dropped to a 21-month low of 47.1 in October from 49.1 in September, the Financial Times reported.

October’s was the third consecutive reading under 50, which indicates a majority of businesses reporting a contraction in activity, and was below the 48.1 forecast by economists polled by Reuters.

The gloomy outlook comes amid domestic political uncertainty, with Rishi Sunak on course to become prime minister after Liz Truss resigned last week.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said October’s flash PMI data showed “the pace of economic decline gathering momentum” after recent political and financial market upheaval.

The economy “therefore looks certain to fall in the fourth quarter after a likely third-quarter contraction, meaning the UK is in recession”, he added.

The latest official data showed that economic output fell 0.3 per cent in the three months to August compared with the previous quarter.

Eurozone PMIs also fell one point to 47.1 in October, suggesting recessionary pressures are widespread across Europe.