Best News Network

UK economy shrinks as economists warn of more pain to come

LONDON (AP) — Britain’s economy shrank in the three months to September, official statistics said Friday, as forecasters warned of many months of contraction to come.

The Office for National Statistics said gross domestic product fell by 0.2% between July and September, a smaller-than-expected contraction that nevertheless is seen to signal the start of a long recession.

GDP shrank by 0.6% in September, and by 0.1% in August, the statistics office said. It said a decline in manufacturing output and an extra holiday to mark the death of Queen Elizabeth II, which contributed to “a notable fall in retail,” were behind the decline.

It said the U.K. economy is now 0.2% smaller than in February 2020, just before the COVID-19 pandemic shut down big chunks of the economy for months.

Britain’s economy, like that of many other countries, is struggling as Russia’s invasion of Ukraine has driven up food and energy costs, pushing consumer price inflation to 40-year highs.

People are also reading…

The Bank of England hiked its main interest rate last week by three quarters of a percentage point, to 3% — its biggest increase in three decades. The central bank said the move was needed to beat back stubbornly high inflation that is eroding living standards and is likely to trigger a “prolonged” recession.

The U.K.’s finances worsened when then-Prime Minister Liz Truss announced a huge package of unfunded tax cuts on Sept. 23. The package alarmed financial markets, sent the pound to a record low against the dollar and forced the Bank of England to step in to stop the crisis from spreading.

Truss resigned less than a month later, leaving her successor, Prime Minister Rishi Sunak, and Treasury chief Jeremy Hunt to find billions in savings to shore up the nation’s finances.

Hunt is due to make an emergency budget statement next week that is expected to include both tax increases and public spending cuts. He said Friday’s figures showed that there would need to be “extremely difficult decisions to restore confidence and economic stability. But to achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling. There is no other way.”

Nicholas Hyett, equity analyst at investment firm Wealth Club, said the economy’s third-quarter performance was “full of warning signs.”

“With consumers battening down the hatches for a tough winter and the government proposing substantial tax rises and spending cuts, we think the economy will shrink again” in the fourth quarter,” he said.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Health News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! NewsAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.