Britain’s fragile state Economie This week will be confirmed by official figures showing a renewed dip in consumer spending amid a rising cost of living, ahead of a possible slowdown in activity during the period of national mourning after the death of Queen Elizabeth II.
City economists expect inflation to rise further to 10.2% in August when official figures are released on Wednesday, as higher weekly store prices and higher energy bills add to the financial strain on struggling families. This would represent a modest increase from July’s reading of 10.1%, which was the first time the CPI had risen above 10% since the early 1980s.
These numbers come after the Bank of England In order to decide on another interest rate increase From the current level of 1.75% this week, in deference to the Queen. With companies, financial institutions and unions canceling or postponing major events amid the national mourning period, the central bank’s monetary policy committee will wait until September 22 to act.
Over the weekend the Queen’s funeral was confirmed Monday 19 September It will be a bank holiday. While providing an opportunity for the public to express their respect, the event can bring mixed blessings to businesses.
Rail industry leaders have said that travel to and from London will be “Too busyHe urged mourners heading to the capital to plan their trips in advance.
Additional bank holidays can provide a boost to retail sales and hospitality spending. However, the additional public holidays also reduced the monthly output of the economy as a whole, with businesses and factories closing their doors early. Official figures showed a Decrease in monthly GDP (GDP) for previous one-time public holidays, including the Queen’s Golden and Diamond Jubilee in 2002 and 2012 respectively.
Simon French, chief economist at brokerage City Panmore Gordon, said one-off public holidays in 2002, 2012 and earlier this year reduced economic output by at least £2 billion. “There are very few similarities at the moment and that makes prediction particularly difficult,” he told the Sunday Times. Maybe we’re not simply talking about an extra bank holiday. There could be a long period of national mourning.”
Government directives issued last week encouraged businesses to consider canceling or postponing events during the mourning period, especially the day of the state funeral. However, there was no obligation to suspend the work, with the decision at the discretion of each company.
However, some retailers temporarily closed their doors on Friday, and many events including conferences and sports fixtures scheduled for this week have been postponed. Taken together, this commentary on normal business and cultural life can weigh heavily on the already bleak economic picture.
Households are beginning to rein in their spending in response to higher prices for basic necessities, as the city braces for the numbers confirming August retail sales fell in Great Britain when the Office for National Statistics publishes its latest monthly data later this week. Economists polled by Reuters expect a decline of 0.4% month over month, reflecting the decline in broader economic activity with Britain in attendance. Drifting into a long stagnation.
Last week the government made plans to Freezing energy bills averaging £2,500 per year For two years, as part of a support package for homes and businesses that represents one of the largest government interventions since the financial crisis. In her first major act as prime minister, Liz Truss said ensuring energy prices would “give people certainty about their energy bills, reduce inflation and boost growth”.
Economists believe that the measures can prevent inflation from rising further from current levels while helping to reduce the impact of the recession. However, the bank is still expected to continue raising interest rates amid the risks of high inflation entrenching, and with the pound under pressure on global financial markets on the back of speculation on the cost of Truss’ tax and spending plans.
Figures released on Monday are expected to show economic activity recovered in July after the fall of June, when the long weekend’s platinum jubilee weighed on growth. After UK GDP fell 0.1% for the month of June, city economists expect a monthly rise of 0.4% in July, while warning that this will represent a temporary respite amid broader pressures on businesses and households.
“July’s GDP should be disappointing,” said Klaus Baader, economist at French bank Societe Generale. Retail sales are likely to show renewed weakness. inflation Maybe it only rose in August, but lately all the surprises have been to the upside, so we must be prepared for another one.”