UK economy shrank for first time since 2021 Covid-19 lockdown: Survey

LONDON (BLOOMBERG) – The British economy probably shrank for the first time since the nation was in a Covid-19 lockdown at the start of 2021, adding to pressure for action from the contenders vying to take over as prime minister.

Gross domestic product (GDP) for the second quarter probably shrank 0.2 per cent, according to a survey of economists by Bloomberg News ahead of the official figures due to be published this week.

The drop would mark a pause in the recovery from the pandemic and the start of a more protracted downturn, which the Bank of England (BOE) expects to last into early 2024.

That outlook is roiling the race to replace Mr Boris Johnson as leader of the ruling Conservative Party and prime minister.

Ms Liz Truss and Mr Rishi Sunak, who are competing in the race set to conclude in September, spent the weekend promoting their ideas to help.

The central bank last week forecast that inflation will accelerate past a 40-year high to more than 13 per cent this year, weighing heavily on consumer spending power.

Former Prime Minister Gordon Brown and the BOE’s former Chief Economist Charlie Bean this weekend added their voices pushing for an aid package that would help those hardest hit.

They say the measures Mr Johnson’s government brought forward earlier this year aren’t enough.

“The main package for households was worth about £15 billion (S$25 billion), and there is certainly a case for something of at least that magnitude again,” Professor Bean said in an interview on Times Radio.

Mr Brown called for an emergency budget, warning that almost half of all households will tip into fuel poverty this winter because of a surge in the cost of electricity and natural gas.

“A financial time bomb will explode for families in October as a second round of fuel price rises in six months sends shock waves through every household and pushes millions over the edge,” Mr Brown wrote in the Observer newspaper. He’s scheduled to appear on British TV on Monday.

The remarks and the outlook for rising natural gas prices adding to the pressure on Ms Truss and Mr Sunak to explain what they would do to revive the economy.

Ms Truss, the front-runner, has said she’d push through immediate tax cuts to help.

Disclaimer: This report is automatically generated from worldwide news services. NTN is not responsible for its content and does not moderate it.

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