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Britain GDP Unexpectedly Lessens

Britain GDP Unexpectedly Lessens
Photo Courtesy: Reuters

Britain’s economy, without any notice, shrank in April. An official figures showed on June 13, 2022, a sharp slowdown before the Bank of England announced the scale of its recent interest rate response to the surge in inflation. Gross Domestic Product (GDP) contracted by 0.3% after falling down by 0.1% in March, the first back-to-back decline since April and March 2020 at the start of the COVID-19 pandemic. Economists polled had expected GDP to grow by 0.1% in April from March. Instead, GDP would have expanded by 0.1 percent, excluding the impact of a reduction in the government’s coronavirus test-and-trace and vaccination programs. But since January 20221, it was the first time that all main economic sectors had reduced. The article contains Britain GDP Unexpectedly Lessens.

Over the three months to April 2022, GDP was increased by 0.2%, lower than the Reuters poll forecast of 0.4% and sharply slowing from growth of 0.8%. Many firms stated increases in the cost of production had affected their business. Martin Beck, Chief Economic Advisor to the EY ITEM Club, a Forecasting Group, stated, the data was a poor launchpad for the second quarter. It was at an increased risk of showing a slight contraction across the three months. However, growth was likely to rebound in the third quarter, so the chance of a second successive quarterly decline in GDP. 

Finance Minister Rishi Sunak, who announced extra support for households and is expected to do more later in 2022, said Britain was not alone in facing the hit from surging inflation and the fallout from Russia’s invasion against Ukraine. He said, “Countries around the world are seeing slowing growth, and the UK is not immune from these challenges.”  However, the Organization for Economic Co-operation and Development thinks that Britain’s economy would face no growth next year, the weakest forecast for 2023 of any country in the Group of 20 except sanctions-hit Russia. On June 13, 2022, the Confederation of British Industry warned of stagnation and possibly a recession.

Economists said the latest GDP data, including a 2.6%, rise in consumer-facing services such as hairdressing and the grooming industry. The retail sector grew by 1.4% as well. But April’s jump in domestic power tariffs and increased taxes paid by workers introduced that month are likely to squeeze living standards and style, and the broader economy.

Separate trade data published by the ONS showed the impact of sanctions on Russia, with exports falling to the country’s lowest monthly value since January 1999 and imports the weakest since March 2004. With energy costs soaring, Britain imported 9.8 billion pounds of fuel in April alone – the highest since records began in 1997 and representing around a fifth of all goods imports.

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