(MENAFN) According to an industry watchdog report, the UK economy is exhibiting symptoms of stagnating as soaring inflation threatens a nationwide recession.
The S&P Global Purchasing Manager's Index (PMI) reported a slowdown in new orders in its survey findings published on Thursday, indicating that UK firms and factories have been hit by a slowdown in new orders as companies raised pay and passed higher costs on to clients.
The preliminary composite index of the PMI remained at 53.1 in June, defying a median prediction of 52.6 in a May Reuters survey of analysts.
Chris Williamson, chief business economist at S&P Global Market Intelligence, stated that “the economy is starting to look like it is running on empty.”
“Business confidence has now slumped to a level which has in the past typically signaled an imminent recession,” he claimed, highlighting that the economy is usual to show a fall in output in the second quarter which could worsen in the third quarter.
Furthermore, UK private sector enterprises report that purchasing hesitation and tightened budgets as a result of rising inflation have hampered demand.
According to Pantheon Macroeconomics' Samuel Tombs, the economy is anticipated to contract even more in the April-June period due to an additional public holiday across the country.
“We still are content with our forecast for a 0.7% quarter-on-quarter decline in GDP in Q2 and only a partial recovery in Q3,” he added.
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