Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Politics News

UK economy grows but fears remain over rising prices

by
August 2, 2022
in Politics News
0
UK economy grows but fears remain over rising prices
0
SHARES
20
VIEWS
Share on FacebookShare on Twitter

The UK economy rebounded in May after shrinking in April and March, official figures show.

The economy grew by 0.5% during the month, the Office for National Statistics (ONS) said, higher than the flat growth most economists expected.

Every area of the economy expanded including construction, travel and manufacturing.

However, businesses reported that higher running costs had led to them to put up prices for customers.

And with household disposable incomes set to fall further in the autumn when energy prices are set to rise again, there is “still a real risk” that the economy could fall into a recession, said Paul Dales, chief UK economist at Capital Economics.

“That may mean the economy proves to be a poisoned chalice for whoever wins the race to be the next prime minister,” he added.

Conservative MPs will cast their first votes in the leadership contest on Wednesday, but whoever replaces Boris Johnson is faced with the dilemma of how to tackle the soaring cost of living.

Both businesses and households are being hit by rising prices, which are surging at their fastest rate for 40 years due to record-high fuel and energy costs.

UK inflation, the rate at which prices rise, hit 9.1% in May, and is expected to reach 11% later this year.

Andrew Bailey, the governor of the Bank of England, has vowed to bring inflation down to its target of 2%, “no ifs or buts”. It has raised rates five times since December and is expected to put them up again next month. He has indicted the Bank will “act forcefully” suggesting it could raise rates by more than 0.25%.

The rise in the cost of living has led to unions calling for pay rises to help workers cope. Several industries, such as the railways, have seen workers strike over pay.

But the government has warned against employers handing out big increases in salaries over fears of a 1970s-style “inflationary spiral”, where firms hike wages and then pass the cost on to customers via higher prices.

Economy rebounds

Darren Morgan, director of economic statistics at the ONS, said the UK economy had “rebounded” in May – with growth across the main sectors, including construction which saw a rise in housebuilding and office refurbishments.

“Health was the biggest driver with many more people seeing GPs, despite test and trace and the vaccination programmes winding down,” he added.

GDP, or gross domestic product, measures the activity of companies, the state and individuals in an economy.

Part of how GDP is calculated includes measuring the total value of the goods and services produced by all sectors of the economy – agriculture, manufacturing, energy, construction – but also health services and the government, In the health sector, we don’t pay for services through the NHS, so one gauge of how it is faring is the number of GP appointments which gives an indication of how that bit of the economy is doing.

Mr Morgan added that road haulage also had a “busy” May, while travel agencies saw a jump in demand as people booked summer holidays.

However, while the economy grew, many businesses reported that an increase in fuel and electricity costs had forced them to put up their prices for customers.

The UK’s statistics body also cited price increases for metals, some foods, including fish, and other staples.

Pub chain JD Wetherspoon warned on Wednesday that its annual losses will be bigger than expected after ramping up wages to attract staff and spending heavily on repairs and marketing.

‘Growth too slow’

Although sales were now matching those seen in 2019, before the pandemic struck, it said staff costs were far higher than pre-Covid, as firms across the sector had to hike wages to overcome staff shortages.

The new chancellor, Nadhim Zahawi – who is in the race to be the next Conservative Party leader and prime minister – said it was “great” to see the economy growing, but added that he knew people were concerned by rising prices.

“We’re working alongside the Bank of England to bear down on inflation and I am confident we can create a stronger economy for everyone across the UK,” Mr Zahawi said.

But Rachel Reeves, Labour’s shadow chancellor, said economic growth was “still far too slow”.

“Instead of presenting the plans we need for a stronger, more secure economy, the Tories are spending every waking minute indulging in unfunded fantasy economics,” she added.


ShareTweetPin

Related Posts

Usain Bolt moves to trademark signature victory pose
Politics News

Usain Bolt moves to trademark signature victory pose

August 23, 2022
London to get new airport as Manston is cleared for take-off
Politics News

London to get new airport as Manston is cleared for take-off

August 23, 2022
Over 1,000 regional businesses are fending off cyber-attacks with police-led cyber resilience
Politics News

Over 1,000 regional businesses are fending off cyber-attacks with police-led cyber resilience

August 23, 2022
British Airways to cancel further flights up to the end of October
Politics News

British Airways to cancel further flights up to the end of October

August 23, 2022
Microsoft in trademark row with UK children’s reading firm Word Windows
Politics News

Microsoft in trademark row with UK children’s reading firm Word Windows

August 23, 2022
Crypto fraud revenues drop 65% following market meltdown
Politics News

Crypto fraud revenues drop 65% following market meltdown

August 23, 2022
Next Post
Gov’t makes full award of fresh 3.5-year bonds on strong demand

Gov’t makes full award of fresh 3.5-year bonds on strong demand

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

After cannabis, Thailand takes step to allow casinos to operate

After cannabis, Thailand takes step to allow casinos to operate

July 28, 2022
Singapore extends stay of Sri Lanka’s Rajapaksa

Singapore extends stay of Sri Lanka’s Rajapaksa

July 27, 2022
In a digital landscape, print remains at BusinessWorld’s core

In a digital landscape, print remains at BusinessWorld’s core

August 10, 2022
Creamline clashes with Petro Gazz at Filoil Arena

Creamline clashes with Petro Gazz at Filoil Arena

July 11, 2022
Extra 2m workers pay higher-rate tax under Boris Johnson

Extra 2m workers pay higher-rate tax under Boris Johnson

July 1, 2022
Ancient DNA solves mystery over origin of medieval Black Death

Ancient DNA solves mystery over origin of medieval Black Death

June 16, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.