Britain’s gross domestic product (GDP) shrank 0.1% in the second quarter as the country’s purchasing power crisis is expected to worsen in the fall. Activity fell due to a slowdown in services, including medical and social services related to the coronavirus, such as the virus detection campaign that employed thousands of people.
This decline was partially offset by a recovery in tourism or restaurants, in particular thanks to the lifting of health restrictions, the National Statistics Office (ONS) detailed on Friday. In the first quarter, growth had reached 0.8%.
In June alone, activity contracted by 0.6%, after an increase of 0.4% in May (revised figure) due in particular to the impact of the Queen Elizabeth II jubilee celebrations, which resulted in two days not worked, the ONS reported on Friday.
“Too soon to talk about a recession”
Second quarter GDP is 0.6% above its level in the same period before the pandemic. The fall in the second quarter “was widely expected given the impact of the Jubilee holidays,” CBI senior economist Alpesh Paleja said. He adds that the sharp increase in electricity rates that will take effect from October should darken the economic outlook this fall as it weighs on a family budget already under pressure with 9.4% inflation.
For KPMG economist Yael Selfin, it is “too early to speak of a recession” but “we expect a more pronounced slowdown in the economy towards the end of the year.” She points out that in addition to skyrocketing inflation, rising interest rates are making it more expensive to repay mortgage loans, many of which are indexed in the UK.
The Bank of England announced last week a half percentage point hike in its official interest rates, a drastic measure to counteract inflation that will accelerate further and, according to him, will plunge the United Kingdom into recession for more than a year since the end. of this year.
Source: BFM TV
