5 worrying figures about the health of the UK economy

► GDP fell 0.1%

Britain is heading into recession. According to Bank of England forecasts, UK GDP is expected to fall by 0.1% in the third quarter of 2022. This will be the second consecutive quarterly decline, officially marking the UK economy’s entry into a recessionary phase. In the first quarter, the drop had also reached 0.1 per cent.

In the medium term, the horizon remains bleak. The Bank of England is already planning “a decline in production every quarter” between the end of 2022 and the end of 2023.

► Inflation is close to 10%

The UK is one of the G7 countries where inflation is the strongest. It remains close to 10% after briefly crossing that symbolic threshold in July. Price growth over 12 months had then reached 10.1%, the highest level in 40 years.

This increase in inflation is largely due to the increase in energy costs. But it also affects many other everyday products from the British. The prices of food, especially dairy products, meat or vegetables are skyrocketing. Like certain hygiene products.

► £60 billion to limit energy growth

In an attempt to contain the rise in energy prices, which should have risen by almost 80% in October, the new UK government has decided to drastically strengthen its “tariff shield”. The measure alone is expected to cost almost £60 billion, around €67 billion, in just six months.

This measure is part of a larger economic program championed by the new Prime Minister, Liz Truss, which features heavy tax cuts prominently. All for a budgetary cost not yet specified but already estimated at between £100 and £200 billion.

► A public deficit of 8%

The announced government measures to deal with the economic slowdown and the acceleration of inflation will weigh on the UK public finances. The deficit should therefore reach 8% of GDP this year and exceed 6.5% next year.

The government was even scolded by the IMF. Criticize the scope of the measures “unfunded” and “untargeted” the international financial institution has asked London to review its copy. Especially those who offer tax breaks, including to the wealthiest households, are at risk “to increase inequalities”.

► Pound falls to 1.035 dollars

The government’s announcements, added to the current economic turmoil, have raised doubts about the health of the UK economy. With a brutal effect on the pound sterling.

The British currency hit its all-time low on Monday, September 26, worth just $1.035. The pound has recovered only slightly since then, stagnating on Thursday September 29 at around $1.08 (about €1.12).


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