LONDON (AFP) - New British Prime Minister Rishi Sunak is inheriting a British economy that was in recession even before the recent turmoil sparked by outgoing Prime Minister Liz Terrace's proposals.

Prime Minister Liz Terrace resigned after her debt-financed tax cuts sparked market turmoil that contributed to the fall in the value of the pound. This caused the government to adjust most parts of its budget, including capping the high energy bills that have contributed greatly to the cost-of-living crisis for tens of millions of Britons.

Data published Monday showed a deepening economic slowdown in October, with private sector output falling to a 21-month low.

"The purchasing managers' index data for October showed that the pace of the economic downturn is picking up after the recent political and financial turmoil in the markets," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Increasing political and economic uncertainty has caused economic activity to decline to a level not seen since the global financial crisis in 2009, with the exception of the months of the COVID-19 pandemic," he added.

Williamson noted that upcoming data may show that Britain is already in recession.

The UK's S&P Global/CIPS Composite PMI settled at 47.2 in October, down from 49.1 in September.

Each level below 50 indicates contraction.

However, the United Kingdom is not alone in recession, as there are separate figures issued by Standard & Poor's indicating an "imminent recession" in Germany, which is the number one economy in Europe.

Liz Terrace resigned Thursday as Prime Minister after just 44 days in office. She succeeded Boris Johnson on September 6, after a weeks-long campaign to take over the leadership of the Conservative Party, in the face of Sunak.

Sunak had previously warned, in the period following Johnson's resignation, that the tax cuts promised by Terrace with the rise in government debt when the government intervened financially to curb the spread of Covid-19, was a wrong policy.

He was proven right, as the budget put forward by Truss sent the value of sterling crashing to a record low near parity with the dollar and caused government bond yields to soar.

Sterling rose and bond yields fell on Monday, with Sunak seen as a stabilizing factor in the markets.

"Investors clearly hope that Sunak will provide stability for the economy and the political situation, although it is currently difficult to determine which is the most difficult task," says Danny Hewson, a financial analyst at the company, "AJ Bell."

"Sunak would be pleased to see European gas prices (declining), as well as a recovery in the pound and a lower cost of government borrowing (with lower yields)," she added.

However, with UK inflation rising to a 40-year high of over 10%, the Bank of England is expected to unveil another large rate hike at next week's meeting.

This increase will put more pressure on borrowers, including homeowners who have seen mortgage rates rise in the wake of the Truss government's budget announcement.

The Director General of the British Chambers of Commerce, Shevon Haviland, called on the new British Prime Minister to provide assistance to companies suffering from huge energy bills.

"The political and economic uncertainty of the past few months has seriously damaged British business confidence, and it must end now," it said in a statement released after Sunak's confirmation of the premiership on Monday.

"The new prime minister must take control of the economy in the difficult times ahead," she added. "This means putting in place clear and fully costed plans to deal with the big issues facing businesses such as high energy bills, labor shortages, spiraling inflation and rising interest rates."