MADRID (ICIS) – The 0.3% decline in UK GDP in April, following a 0.1% drop in March, ran counter to expectations of an economic expansion and added to fears that the country and economies elsewhere in Europe are heading into a recession.
UK industrial production fell 0.6% in April, again against analysts’ consensus for an expansion.
In addition, the country’s Office for National Statistics (ONS) also said this week that output in the petrochemical-intensive construction sector fell in April, down 0.4% month on month. ‘other.
Britain’s government, grappling with decades-long high inflation fueling a cost-of-living crisis, said the main negative contribution to April’s plunge in GDP was the dismantling of its COVID-19 testing programme, which seriously affected the service sectors. .
However, despite the strong effect of services, the manufacturing sector also suffered in April from the negative consequences of high energy prices and logistical difficulties.
Inflation in the UK has reached a
40-year high in April at 9%; the ONS is due to release May inflation figures on June 22.
In the euro zone – which includes Germany, France, Italy and Spain – inflation has
May at 8.1%the highest since the creation of the monetary union with 19 countries.
“Output fell for the third consecutive month in April, with a contraction of 0.6%, mainly driven by the manufacturing sector,” the ONS said.
“Manufacturing fell 1.0% in April with declines in eight of 13 subsectors. Anecdotal evidence suggests that the manufacturing sub-sector has been affected by rising prices, particularly oil and energy prices.
ONS data released on Monday was one factor in the fall in European stock markets, with falls of around 2% in major exchanges.
In the United States, high inflation and impending interest rate hikes cause a bear market, when stocks fall 20% from their peak, which for the S&P 500 Index – the main stock exchange in the United States – happened in January.
Spooked by negative sentiment in the US and Europe, stock exchanges
Asia also fell tuesday; European stocks were trading lightly at 10:00 CEST.
Kevin Swift, senior economist for global chemicals at ICIS, said the latest data was evidence the economy was cooling, although he has not yet called it a recession.
“The effects of rising energy prices and the spillover effects of the war in Ukraine (on energy, food, etc.) are weighing on confidence and productive activity,” Swift said.
“[The] UK GDP consensus [growth in April]
was an increase of 0.1%, and for industrial production, a gain of 0.2% was expected. The fall in GDP marks two consecutive declines, and three for industrial production. The trend is not good: it is getting worse.