The British economy shrank in the second quarter of 2022 as the country’s cost-of-living issue took hold. Official numbers released on Friday revealed that GDP fell by 0.1% quarter on quarter in the second three months of the year, less than the 0.3% drop predicted by economists. It follows a 0.8% increase in GDP in the first quarter of the year.
According to the Office for National Statistics, the UK’s GDP declined by 0.1% between April and June, compared to a 0.8% increase in the preceding quarter. GDP fell by 0.6% in June, while May growth estimates were revised downward from 0.5% to 0.4%. The major factor in the drop was the government’s reduction in coronavirus testing, contact tracing, and immunisation programmes.
The Bank of England warned that the United Kingdom’s economy will enter its deepest recession since the global financial crisis in the fourth quarter. Meanwhile, inflation is expected to exceed 13% in October.
According to the Office for National Statistics, which publishes the growth numbers, the reduction was mostly driven by a drop in service production, with health and social work activities being the biggest drag, indicating a dip in Covid-19 operations. It stated that household spending fell 0.2% in the second quarter, which was offset by a positive contribution from net trade.
The average home fuel cost in the United Kingdom has increased by more than 50% this year as the conflict in Ukraine reduces global oil and natural gas supplies, and another hike is expected in October when the average price is expected to reach 3,500 pounds ($4,300) a year.
Anti-poverty activists, consumer groups, and opposition lawmakers are putting pressure on Prime Minister Boris Johnson’s Conservative administration to assist individuals in dealing with rising costs. However, Johnson is in his closing weeks as prime minister and has stated that major economic choices must be left to his successor, who will enter office in September.
