UK private sector growth has hit a three-month low as rising interest rates and soaring inflation worsen the cost of living crisis, according to new data. The figures, released today, have put additional pressure on Prime Minister Rishi Sunak as the country grapples with economic hardship.
The Standard & Poor’s Purchasing Managers’ Index (PMI) in the UK dropped to 52.8 in June from 54 in May. A PMI reading above 50 indicates growth, while a reading below 50 suggests a decline. This latest data suggests that the UK economy has lost momentum and is likely to weaken further in the coming months.
Chris Williamson, senior economist at Standard & Poor’s Global Market Intelligence, commented on the survey, stating that “consumer spending on services, which was a major driver of growth in the spring, is now showing signs of faltering.” He attributed this to rising interest rates, the increasing cost of living, and pessimism about future prospects, which are counteracting the effects of a short boost in spending.
The cost of living crisis has been exacerbated by soaring food prices, contributing to the rising inflation rate. Official data revealed that the annual inflation rate in the United Kingdom reached 8.7 percent in May, unchanged from April. As a result, the Bank of England raised its main interest rate on Thursday, exceeding expectations. This marks the thirteenth consecutive increase in interest rates.
Economists are now predicting that rates could reach six percent this year, potentially pushing the United Kingdom into a recession similar to the eurozone. In response to the economic challenges faced by mortgage holders, the British government has announced measures to assist them. These measures include extending the non-payment period and allowing customers to pay only debt service for six months, as well as extending the mortgage period to reduce monthly payments.
The latest data and economic indicators highlight the ongoing struggles faced by the UK economy and the urgency for the government to address the cost of living crisis. Prime Minister Rishi Sunak will face mounting pressure to implement effective measures to support businesses and households and stimulate economic growth.
What measures is the British government taking to assist mortgage holders and alleviate the economic challenges faced by households in light of the ongoing struggles in the UK economy
UK private sector growth has hit a three-month low, with rising interest rates and soaring inflation exacerbating the cost of living crisis, according to new data. Released today, the figures add further pressure on Prime Minister Rishi Sunak as the country grapples with economic hardship.
The Standard & Poor’s Purchasing Managers’ Index (PMI) fell to 52.8 in June from 54 in May. A reading above 50 indicates growth, while a reading below 50 suggests a decline. This latest data suggests that the UK economy is losing momentum and is expected to weaken further in the coming months.
Chris Williamson, senior economist at Standard & Poor’s Global Market Intelligence, commented on the survey, noting that “consumer spending on services, which was a major driver of growth in the spring, is now showing signs of faltering.” He attributed this to rising interest rates, the increasing cost of living, and pessimism about future prospects, which are offsetting the effects of a brief surge in spending.
The cost of living crisis has been worsened by soaring food prices, contributing to the rising inflation rate. Official data revealed that the annual inflation rate in the UK remained at 8.7 percent in May. As a result, the Bank of England raised its main interest rate on Thursday, surpassing expectations. This marks the thirteenth consecutive interest rate increase.
Economists now predict that rates could reach six percent this year, potentially pushing the UK into a recession similar to the eurozone. In response to the economic challenges faced by mortgage holders, the British government has announced measures to assist them. These measures include extending the non-payment period and allowing customers to pay only debt service for six months, as well as extending the mortgage period to reduce monthly payments.
The latest data and economic indicators highlight the ongoing struggles faced by the UK economy and the urgent need for the government to address the cost of living crisis. Prime Minister Rishi Sunak will face mounting pressure to implement effective measures to support businesses and households and stimulate economic growth.
It’s concerning to see that UK private sector growth is slowing down due to the impact of rising interest rates and inflation. As the cost of living crisis worsens, it’s crucial for policymakers to find effective solutions to mitigate these challenges and support businesses to spur growth.
The UK private sector’s slowing growth due to rising interest rates and inflation indicates just how severe the cost of living crisis has become. Urgent action is needed to alleviate the burden on individuals and businesses alike.