Customers stroll by means of the rain on Oxford Road in London.
Tolga Akmen/AFP/Getty Pictures
The U.Ok. economic system contracted within the second quarter of 2022, because the nation’s cost-of-living disaster hit residence.
Official figures printed Thursday confirmed that gross home product (GDP) shrank by 0.1% quarter on quarter within the second three months of the 12 months, lower than the 0.3% contraction anticipated by analysts.
It comes after GDP expanded by 0.8% within the first quarter of the 12 months.
Final week, the Financial institution of England warned that it expects the U.Ok. economic system to enter its longest recession for the reason that world monetary disaster within the fourth quarter. Inflation, in the meantime, is projected to peak above 13% in October.
Month-to-month estimates confirmed that GDP fell 0.6% in June, lower than the 1.3% consensus forecast, however down from a revised 0.4% enlargement in Might.
“U.Ok. development is stagnating because the economic system faces challenges from a extreme actual earnings squeeze amid elevated inflation and better rates of interest,” mentioned Hussain Mehdi, macro and funding strategist at HSBC Asset Administration.
“On this backdrop, it will likely be tough to dodge recession, particularly with upside dangers to vitality costs heading into the winter.”
Regardless of the macroeconomic headwinds, nonetheless, HSBC backs large-cap U.Ok. equities to proceed to outperform this 12 months given “publicity to commodity, worth and defensive names.”
The Workplace for Nationwide Statistics, which publishes the expansion figures, mentioned the contraction was largely pushed by a fall in providers output, with the most important drag coming from well being and social work actions, reflecting a decline in Covid-19 actions.
It famous that there was a 0.2% fall in family consumption within the second quarter, offset by a constructive contribution from internet commerce.
This can be a creating information story and can be up to date shortly.
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