Sun, April 21, 2024

The UK economic growth slows to weakest since March

The UK economic growth slows to weakest since March

According to a closely watched business survey, severe shortages of workers and supplies have hardly hit Britain’s economy. Notably, economic growth in the United Kingdom has been dragged down to the weakest levels since COVID-19 pandemic restrictions were eased in March.

Remarkably, the latest data from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed that growth in private sector output slowed in August. Notably, the decline came as companies battled with severe shortages while costs increased at the fastest pace since the late 1990s.

Additionally, business activity faltered in the dominant service sector, accounting for 80% of the economy. At the same time, the slowdown was more pronounced in manufacturing, where severe supply-chain disruption held back expansion in factory output.

Meanwhile, in a sign that the economic rebound from lockdown is reducing, business expectations for the year ahead declined to their lowest since January. Moreover, new orders fell to a seven-month low.

Besides, the IHS Markit/Cips flash purchasing managers’ index slipped from 54.1 in September to 54.8 in August. Notably, anything above 50 means expansion. City economists had anticipated a reading of 54.5.

The United Kingdom’s blue-chip benchmark fell by 0.07%, at 7,087

According to the chief business economist at IHS Markit, Chris Williamson, the measure of business activity would add to worries that the United Kingdom economy was heading for a stagflation. Stagflation is a period of weak economic growth accompanied by rapid growth in consumer prices.

Moreover, the survey of around 1,200 service-sector companies and manufacturers revealed a sharp rise in companies’ costs. The survey is closely observed by the Bank of England (BoE) and the Treasury for early warnings signs from the economy.

Notably, against a backdrop of increasing transport costs, product shortages, and higher staff wages, companies raised their prices at the fastest pace since the survey started in July 1996.

Williamson added that shortages are lifting prices at unprecedented rates as organizations pass on higher supplier charges and increases in staff pay. He also stated that Brexit was often cited as having worsened global pandemic-related supply and labor market constraints and was often accused of lost export sales.

The United Kingdom’s blue-chip benchmark closed down about five points lower, which equals 0.07%, at 7,087.

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