UK.. downturn in economic activity and slide into recession

British economic activity recorded a downturn in the third quarter of this year as inflation and rising costs of living began to weigh on the stagnant economy.

The National Bureau of Statistics said in its monthly report on economic activity that gross domestic product declined 0.2 percent between July and September compared to a similar increase in the second quarter.

The decline was especially pronounced in September as it was recorded (-0.6 percent) due to a national holiday to mark the funeral of Queen Elizabeth II, which led to the closure of many businesses.

Labor Chief Economic Officer Rachel Reeves called the GDP figures “deeply worrying”.

The end of September also saw financial turmoil caused by the massive and unfunded budgetary measures of the previous government led by former Prime Minister Liz Terrace.

The Bureau of Statistics cited the high cost of living as a factor that puts pressure on companies’ production, and inflation, which is about 10 percent in the country.

The consumer and retail sectors have been particularly affected by the reluctance of consumers who are facing rising bills.

And it seemed that former finance minister Kwasi Quarting partly wanted to distance himself from that setback, as he said in a TV interview that he was trying to warn Trouss that growth-enhancing fiscal measures were going “too fast,” although he admitted that they are “surprised” by the market and that it is responsible.

These budget announcements sent the pound sterling down to its lowest level in history and UK long-term debt rates rose, impacting corporate and household loans, especially as the Bank of England was in the process of raising interest rates. calm inflation.

Last week, he raised the benchmark interest rate by 0.75 points – the highest increase since 1989 – to 3 percent, painting a bleak economic picture, warning of what could be the UK’s longest recession.

Last summer, many sectors of the economy were disrupted by a shortage of workers, partly caused by the withdrawal of those over 50 or those with chronic illnesses from the labor market, many of which are caused by the effects of Covid. .

Labor shortages, also associated with the UK’s exit from the European Union, have made it difficult for European workers to enter the country.

Source: AFP

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