The Bank of England has warned that the UK is facing its longest recession since records began a century ago.
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LONDON – The UK economy shrank by 0.2%% The third quarter of 2022 marks the beginning of what could be a long recession.
A preliminary estimate indicated that the economy performed better than expected in the third quarter, despite the slowdown. Economists had forecast a 0.5% contraction, according to Refinitiv.
After the second quarter’s 0.1% contraction was revised up to a 0.2% increase, the contraction still doesn’t represent a technical slowdown — two straight quarters characterized by negative growth.
“In terms of output, there was a slowdown in the quarter for the services, manufacturing and construction industries; the service sector slowed to flat output in the quarter, driven by a decline in consumer-facing services, while the manufacturing sector fell 1.5%. Quarter 3 2022 included declines in all 13 subsectors of the manufacturing sector,” the National The statistics office said in its report on Friday.
The Bank of England Last week forecast The nation’s longest recession since records beganThe decline, which began in the third quarter, will continue until 2024 and suggests that unemployment will remain at 6.5% over the next two years.
The country is facing a historic cost-of-living crisis, fueled by a squeeze on real incomes from rising energy and tradable commodity prices. The central bank has recently imposed Biggest rise in interest rates since 1989 Policymakers are trying to control double-digit inflation.
The ONS said the level of quarterly gross domestic product in the third quarter was 0.4% lower than its pre-Covid level in the final quarter of 2019. Meanwhile, figures for September showed UK GDP fell 0.6%, hurt by the public holiday. For the state funeral of Queen Elizabeth II.
UK Finance Minister Jeremy Hunt will announce a new fiscal policy agenda next week, which is expected to include significant tax increases and spending cuts. Prime Minister Rishi Sunak has warned that tough decisions will have to be taken to stabilize the country’s economy.
“Although some intervention inflation numbers are starting to look better from here, we expect prices to remain elevated for a while, adding more pressure to demand,” said Jorge Lagarias, chief economist at Mazars.
“If next week’s budget proves to be indeed ‘hard’ on taxpayers, as expected, consumption will be suppressed further and the Bank of England will have to start thinking about the impact of the demand shock on the economy.”
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