Signs of Recession or Economic Slowdown in the UK

Signs of Recession or Economic Slowdown in the UK

The Gross Domestic Product data was released today in the UK for the previous month, which is important due to the current economic situation in England.

The GDP is an important economic measurement because it shows if the economy of a country expanded or contracted. So, expansion indicates a healthy economy, whereas contraction precipitates recession.

Taking into consideration the elevated level of inflation along with the tight labor market and the low wage earnings in the UK, the data release is a first sign of the country’s economic health as well as a guidance signal of how the government should react.

UK Strike

Also, do not forget the recent strike in the UK in the governmental sector last week which will occur today as well again demanding better wages and better working conditions.

In yesterday’s Monetary policy hearing, governor Bailey stated that his fellow MPC’s and himself are speculating that inflation will decrease much more than expected within the fiscal year and that a further interest rate hike will occur if necessary.

The GDP data release today was forecasted to be –0.3% and the actual was –0.5%, higher than expected, raising concerns. Should a repeat of negative result occur for the next 2 months, the UK will be halfway into recession. On that note, Governor Bailey and members of the monetary committee said yesterday that If recession occurs it will be soft. Would it be?

The tight labor market and low earnings wages suggest otherwise, raising the question of will there be a downward spiral for the UK economy?

Huw Pill Chief Economist and Executive Director for Monetary Analysis and Research for the Bank of England did say “I anticipate an extended period of weakness in the UK economic activity” to the simple-minded sounds like an anticipation of recession to a higher degree than expected.

Next week the unemployment claims, and inflation measurement data will be released from the UK and there are no forecasts or prediction yet, raising the question of whether there will be a recession coming or just an Economic slowdown.

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