UK Economy Slows As Recession Prognosis Worsens

The UK economy contracted between April and June as analysts predicted a dismal future and impending recession. The Office for National Statistics (ONS) reported that the economy shrank by 0.1% in the second quarter of this year.

According to the report, this was partially caused by Covid programmes like Test and Trace coming to an end, declining retail sales, and the Queen's Platinum Jubilee bank holiday in June. The Bank of England predicts that as energy prices rise, the UK will experience a recession at the end of the year.

The UK economy shrank between April and June but avoided a recession because the GDP increased by 0.8% in the first quarter of this year. When the economy contracts for two consecutive three-month periods, it is said to be in a recession. Most analysts, including the Bank of England, had previously predicted that a recession would not start until the latter three months of 2022.

Between July and September, a modest recovery in economic growth was widely anticipated. However, several analysts have expressed concern that the recession may arrive sooner than previously anticipated in light of the most recent ONS data. The UK economy is anticipated to continue contracting over the ensuing three quarters, according to the National Institute of Economic and Social Research.

According to Capital Economics, there is a larger chance today that the economy would contract by 0.2% between July and September before getting worse. Goldman Sachs, a financial services company, continued to forecast 0.4% growth in the third quarter of 2022. "We had previously projected a significant bounce back in July but now predict a more modest comeback," a spokeswoman said.

If the UK is entering a recession, we don't believe this is the beginning of it, according to HSBC's forecast. The Bank of England and we both still anticipate a bounce-back in July, the reversal of the bank holiday effect, to position the UK for a strong third quarter. Kingdom Chester pub and restaurant owner Thenga said that he already feels as though the UK is in a recession.