British GDP increased by 0.2% after declining by 0.6% in June, as per a report from the Office for National Statistics
According to data released on Monday, the UK’s recession-threatened economy recovered in July. However, a public holiday marking the funeral of Queen Elizabeth II the following week is expected to further hurt the economy. British GDP increased by 0.2% after declining by 0.6% in June, according to a statement from the Office for National Statistics. Prior to the queen’s death last week, the large fall in June had been partially attributed to an additional public holiday for the Platinum Jubilee celebrations of her monarchy. Businesses canceled meetings across London and closed some of the country’s largest malls and theme parks.
The bleak picture coincides with mounting recessionary dangers for the nation. In line with earlier predictions from the Bank of England, Goldman Sachs issued a warning this week that the United Kingdom would experience a recession in the fourth quarter of this year. Brits are currently preparing for a difficult winter for both households and businesses. The British pound has been falling over the previous few months and dropped to a 37-year low on Wednesday of $1.1469. Next Monday is a holiday in observance of the queen’s state funeral. Yael Selfin, the chief economist at KPMG UK, remarked that the weak GDP in June, which was a result of the loss of working days from the Jubilee holiday weekend, was the main cause of the modest 0.2% rebound in July. More worryingly, July’s GDP was lower than it was in May, suggesting that the economy shrank generally over the first two months of the summer. Britain typically only observes one public holiday in the early summer, but for the Jubilee, the number was doubled. The economy will have experienced two more public holidays than usual in 2022 because millions of Britons will be taking the following Monday off from work. In response to decades-high inflation fueled by rising energy and food prices, the Bank of England (BoE) anticipates that the UK economy will enter a recession before the end of the year. According to Samuel Tombs, chief UK economist at Pantheon Macroeconomics, the extra public holiday for the queen’s burial on September 19 could have a greater negative impact on the economy than the extra day off for the Jubilee in June. However, as the majority of them did in June, many enterprises and businesses will be able to make up lost time. The burial is expected to reduce September’s GDP by 0.2 percent, according to Pantheon. That means that a technical recession, which is generally understood to have decreased the GDP by two-quarters, is still possible. The BoE anticipates continued increases in UK inflation this year, which is already at a 40-year high above 10%. Since the end of last year, the central bank has increased its main interest rate multiple times in an effort to control the spiraling prices. At a meeting of its monetary policy this week, the BoE had committed to further tightening of borrowing costs; but, it postponed that meeting until after the funeral. It is important to note that the UK is struggling to prevent an economic recession as a result of inflation and an energy crisis. The Bank of England raised interest rates this month by 0.5% points, the greatest single hike in over 30 years, as the overall measure of inflation reached 10% for the first time since the 1980s.
In light of the fact that people’s disposable income is at its lowest point in almost five years, a fifth of UK households currently face an average deficit of £60 per week between what they earn and what they need to pay for necessities like power bills, rent, transportation, and food. According to BBC, the Sterling dropped 064% on Wednesday to reach $ 1.145, a figure not witnessed in more than 35 years. The Bank of England also claimed that the pressure on the pound was being caused by a poorer outlook for the UK economy and a stronger dollar. According to the Bank, the economy will decrease in 2022’s final three months and keep declining through the end of 2023.
