UK economy is 'running on empty,' according to financial watchdog, as recession warnings rise
(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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