The Bank of England has warned that the UK is facing the longest recession since records began a century ago.
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LONDON – The UK economy shrank 0.2% in the third quarter of 2022, marking what could be the start of a long recession.
Initial estimates are that the economy performed better than expected in the third quarter, despite the downturn. Economists had expected a contraction of 0.5%, according to Refinitiv.
The contraction is not yet a technical recession – characterized by two consecutive quarters of negative growth – after the second quarter’s contraction of 0.1% was revised to a 0.2% increase.
In terms of production, there was a slowdown in the quarter in the services sector, production and construction; the services sector slowed to flat production in the quarter driven by a decline in consumer-oriented services, while the production sector fell by 1.5% in the third quarter 2022, including declines in all The 13 sub-sectors of the manufacturing sector,” the Office for National Statistics said in its report on Friday.
The Bank of England Last week’s forecast Longest recession in the country since records begansuggesting that the slowdown that began in the third quarter will likely continue into 2024 and send unemployment to 6.5% over the next two years.
The country is facing a historic cost of living crisis, fueled by pressures on real income from rising energy and tradable goods prices. Recently imposed by the central bank Biggest interest rate hike since 1989 As policymakers try to tame double-digit inflation.
The Office for National Statistics said the level of quarterly GDP in the third quarter was 0.4% lower than its pre-Covid level in the last quarter of 2019. Meanwhile, the September figures, during which UK GDP fell 0.6%, were impacted by the holiday. official. For the state funeral of Queen Elizabeth II.
Next week, British Finance Minister Jeremy Hunt will announce a new fiscal policy agenda, which is expected to include big tax increases and spending cuts. Prime Minister Rishi Sunak has warned that “difficult decisions” must be taken in order to stabilize the country’s economy.
“While some key inflation numbers may start to look better going forward, we expect prices to remain elevated for some time, adding further pressures on demand,” said George Lagarias, chief economist at Mazars.
“If next week’s budget turns out to be ‘difficult’ for taxpayers, as expected, consumption will likely be suppressed further, and the BoE should start thinking about the impact of the demand shock on the economy.”
This is a breaking news story and will be updated soon
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