Shoppers stroll by way of the rain on Oxford Street in London.
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The U.Okay. financial system contracted in the second quarter of 2022, because the nation’s cost-of-living disaster hit residence.
Official figures printed Thursday confirmed that gross home product (GDP) shrank by 0.1% quarter on quarter in the second three months of the yr, lower than the 0.3% contraction anticipated by analysts.
It comes after GDP expanded by 0.8% in the primary quarter of the yr.
Last week, the Bank of England warned that it expects the U.Okay. financial system to enter its longest recession for the reason that international monetary disaster in the fourth quarter. Inflation, in the meantime, is projected to peak above 13% in October.
Monthly estimates confirmed that GDP fell 0.6% in June, lower than the 1.3% consensus forecast, however down from a revised 0.4% growth in May.
“U.K. growth is stagnating as the economy faces challenges from a severe real income squeeze amid elevated inflation and higher interest rates,” mentioned Hussain Mehdi, macro and funding strategist at HSBC Asset Management.
“In this backdrop, it will be difficult to dodge recession, especially with upside risks to energy prices heading into the winter.”
Despite the macroeconomic headwinds, nevertheless, HSBC backs large-cap U.Okay. equities to proceed to outperform this yr given “exposure to commodity, value and defensive names.”
The Office for National Statistics, which publishes the expansion figures, mentioned the contraction was largely pushed by a fall in providers output, with the biggest drag coming from well being and social work actions, reflecting a decline in Covid-19 actions.
It famous that there was a 0.2% fall in family consumption in the second quarter, offset by a constructive contribution from internet commerce.
This is a growing information story and might be up to date shortly.