Posted: 18.10.2022 09:36:00

Reuters: UK economy on the brink of recession

The British economy looks set to fall into recession as rising inflation hits households hard, forcing the Bank of England to raise interest rates quickly, Reuters reports


The current situation highlights certain difficulties in the implementation of the Prime Minister Liz Truss of her promises to accelerate economic growth.

The agency’s journalists write that due to the weakness of production and repair works at oil and gas fields in the North Sea, the gross domestic product fell by 0.3 percent compared to July. This also affected the mining sector, which dropped by 8.2 percent.

According to economists, the country’s production in general fell by 1.6 percent compared with the second month of summer.

“Many other consumer-facing services are also struggling. Retail, hairdressers and hotels are doing really poorly,” said ONS Xhief Economist Grant Fitzner.

The specialists underline that in the future the British economy will slow down even more due to the fact that rising inflation hits households very hard.

Pantheon Macroeconomics economist Samuel Tombs said about a third of households no longer have meaningful savings.

“Everything that is happening in the country’s economy suggests that the recession will end no earlier than late 2023,” the economist says.

As far as the forecasts of the International Monetary Fund are concerned, it is expected that GDP in the UK in 2023 will still grow, but only by 0.3 percent.