In the UK, the country’s gross domestic product (GDP) shrank by 0.1% in the second quarter as the country’s purchasing power crisis is expected to worsen in the fall. Activity has slowed due to a slowdown in services, including medical and social services, related to the coronavirus, such as the virus screening campaign that employed thousands of people. The decline was partly offset by a recovery in tourism or catering, particularly thanks to the lifting of health restrictions, the Office for National Statistics (ONS) explained on Friday.
Growth reached 0.8 percent in the first quarter. In June alone, activity shrank by 0.6%, after a 0.4% rise in May (revised estimate) and mainly due to the impact of Queen Elizabeth II’s Jubilee celebrations, the ONS said, as a result of two days off work. Friday. GDP in the second quarter was 0.6% below its level in the same period before the pandemic.
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CBI Senior Economist Alpesh Paleja said the decline in the second quarter was widely expected given the impact of the Jubilee holidays. He adds that a sharp hike in electricity rates effective from October will darken the economic outlook in this downturn, weighing on a household budget under pressure with inflation at 9.4%. KPMG economist Yale Self said it was “too early to talk about a recession” but “we expect a more pronounced slowdown in the economy towards the end of the year”. In addition to soaring inflation, rising interest rates are making home loan repayments more expensive, many of which are indexed in the UK.
The Bank of England last week announced a half-percentage point increase in its key interest rates, a tough move to counter inflation, which could accelerate further and push the United Kingdom into recession for more than a year since the end of the year. This year.
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