Official figures released on June 13 showed that the United Kingdom’s Gross Domestic Product (GDP) unexpectedly fell in April, raising fears of a dramatic slowdown just three days before the Bank of England reveals the amount of its latest interest rate response to the spike in inflation. The economy contracted by 0.3 percent in April. After contracting by 0.1 percent in March, the first back-to-back contractions. Since the coronavirus pandemic began in April and March 2020, respectively.
Rishi Sunak, Britain’s finance minister, said the country was not alone in feeling the effects of rising prices and the aftermath from Russia’s invasion of Ukraine. “Countries around the world are seeing slowing growth, and the UK is not immune from these challenges,” Sunak said in a statement.
In May, Sunak announced additional household assistance. He is likely to accomplish more in 2022. The Organization for Economic Cooperation and Development predicted last week that Britain’s GDP will grow. At zero percent in 2023, the worst forecast of any Group of 20 (G20) country for the coming year. With the exception of sanctions-hit Russia.
On June 13, the Confederation of British Industry warned of stagnation and the possibility of a recession. Despite the slowdown, the Bank of England is set to raise interest rates for the sixth time since December on June 16.
UK Inflation exceeds by 10%
Inflation is expected to exceed 10% in the fourth quarter, exceeding the government’s target by five percentage points. The majority of investors and analysts expect another quarter-point rate increase this week, raising the bank rate to 1.25 percent, its highest level since 2009.
Because of rising energy prices, the United Kingdom imported 9.8 billion pounds of fuel commodities in April alone, the most since records began in 1997 and accounting for more than a fifth of total goods imports.
According to economists, Monday’s GDP report contained some encouraging news. Such as a 2.6 percent increase in consumer-facing services. As well as hairdressers and the grooming industry. The retail sector grew by 1.4 percent as well.
However, the April increase in domestic electricity tariffs. As well as an increase in worker taxes, are expected to put downward pressure. Thus, on living standards and the overall economy.