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Economy The British economy is shrinking more than expected

London, Dec 22 – The UK economy shrank more than previously thought in the third quarter. Gross domestic product fell by 0.3 percent in the July-September quarter compared with the previous quarter, the Statistics Office said on Thursday in London. So far, only minus 0.2 percent was considered, but corporate investments fell more sharply than initially estimated. According to the Office for Statistics, no other major industrialized country (G7) did as badly as Great Britain in the summer quarter. By comparison: the German economy grew by 0.4 percent.

The British are suffering from an energy crisis and high inflation, which is reducing the purchasing power of citizens. Workers from various sectors are currently on strike demanding substantial wage hikes. Unions expect more than a million working days to be lost due to strikes this month. So the central bank expects economic output to contract again in the fourth quarter, which ends. The Organization for Economic Co-operation and Development (OECD) expects the UK to underperform other European economies in 2023.

During periods of recession and high inflation, the prime interest rate in the UK continues to rise. The Bank of England (BoE) last week raised rates for the ninth time in a row – by half a point to 3.50 percent. This makes borrowing for investment and consumption more expensive, which could mean a new headwind for the British economy. The inflation rate has weakened slightly recently, but remains exceptional at 10.7 percent. On the other hand unemployment has increased. New British Prime Minister Rishi Sunak’s government also announced austerity measures.

British economy shrinks more than expected

Source: Reuters

Code photo: Image by Korvi Rakshant on Pixbay

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