29 C
Brunei
Saturday, October 1, 2022
29 C
Brunei
Saturday, October 1, 2022
More
    - Advertisement -
    - Advertisement -

    UK economy shrinks in Q2, sharpening recession fear

    LONDON (AP) – The United Kingdom’s (UK) economy shrank in the three months to June, figures released yesterday showed – a smaller-than-expected contraction that nevertheless added to jitters about the rocky months ahead.

    The Office for National Statistics (ONS) said Britain’s gross domestic product (GDP) fell by 0.1 per cent between April and June, down from 0.8 per cent growth in the previous quarter. GDP shrank by 0.6 per cent in June, and growth estimates for May were revised down from 0.5 per cent to 0.4 per cent.

    The statistics office said health spending was the biggest contributor to the fall, as the government scaled down coronavirus testing, contact tracing and vaccination programmes.

    “Many retailers also had a tough quarter,” said ONS director of economic statistics Darren Morgan. “These were partially offset by growth in hotels, hairdressers and outdoor events across the quarter,” partly as a result of celebrations of Queen Elizabeth II’s Platinum Jubilee in June.

    Analysts said the decline did not necessarily mean the start of a recession, often defined as two quarters of economic contraction. The Bank of England, however, said the UK will likely fall into recession later this year as a cost-of-living crisis worsens and inflation rises above the current 9.4 per cent.

    The average UK household fuel bill has risen over 50 per cent this year as the war in Ukraine squeezes global oil and natural gas supplies, and another increase is due in October, when the average’s bill is forecast to hit GBP3,500 (USD4,300) a year.

    “The fall in UK GDP during the second quarter was largely down to noise,” said developed markets economist at ING Economics James Smith. “But the risk of recession is rising quickly, with gas futures hitting new highs for next winter and our latest estimates suggesting the household energy price cap could come close to GBP5,000 in the second quarter of next year. Much now depends on fiscal policy announcements in the autumn.”

    Anti-poverty campaigners, consumer groups and opposition politicians are pressing Prime Minister Boris Johnson’s Conservative government to help people cope with soaring bills. But Johnson is in his final weeks as prime minister and says “significant fiscal decisions” must be left to his successor, who will take office in September.

    Shoppers rest in London’s biggest shopping street, Oxford Street, in London. PHOTO: AP
    - Advertisement -
    spot_img

    Latest article

    - Advertisement -
    spot_img