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UK slowdown fears mount as GDP unexpectedly shrinks in April

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© Reuters. FILE PHOTO: A man wearing a face mask walks along the River Mersey with the Liverpool skyline amid the outbreak of the coronavirus disease (COVID-19) in Seacombe, Britain, October 12, 2020. REUTERS/Phil Noble

LONDON (Reuters) -Britain’s economy unexpectedly shrank in April, official figures showed on Monday, adding to fears of a slowdown three days before the Bank of England announces the scale of its latest interest rate response to the surge in inflation.

Gross domestic product contracted by 0.3% from March. Economists polled by Reuters had on average expected gross domestic product (GDP) to grow by 0.1% in April from March.

It was first time since January last year that all main economic sectors had contributed negatively to monthly GDP.

However, GDP would have grown by 0.1% excluding the impact of a scaling back of the government’s coronavirus test-and-trace and vaccination programmes, the Office for National Statistics said.

Over the three months to April, GDP was up by 0.2%, slowing sharply from growth of 0.8% in the three months to March. The Reuters poll had pointed to 0.4% growth in the February-April period.

“Many respondents reported that increases in the cost of production had affected their business,” the ONS said.

Some economists said before Monday’s data they had expected April’s jump in domestic power tariffs and an increase in taxes paid by workers introduced during the month to impact the monthly GDP data only in May.

Finance minister Rishi Sunak said Britain was not alone in facing the hit from surging inflation and the fallout from Russia’s invasion of Ukraine.

“Countries around the world are seeing slowing growth, and the UK is not immune from these challenges,” he said in a statement.

However, last week the Organisation for Economic Co-operation and Development said British gross domestic product would grow by 3.6% this year before flat-lining at 0.0% next year, the weakest forecast for 2023 among all countries in the Group of 20 with the exception of Russia.

Despite the slowdown, The BoE is expected to raise interest rates for the fifth time since December on Thursday.

It has forecast inflation will exceed 10% in the final quarter of the year, five times its target.

Most investors and economists expect another quarter percentage-point rate hike this week.

Separate trade data published by the ONS showed the impact of sanctions on Russia with exports to the country falling to the lowest monthly value since January 1999, and imports the lowest since March 2004.

(Reporting William Schomberg and Andy Bruce; editing by Kylie MacLellan)

Economy

Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling

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oil Russia ban

Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.

“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.

According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.

In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.

Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.

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Economy

EU talks on restrictions on Russian crude oil prices today stalled

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russian crude oil price today

Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.

Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.

“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.

Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.

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Economy

More than 50% of Germans said they had given up shopping for new clothes and electronics. Is Germany’s economy failing?

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is germany's economy failing

Die Welt newspaper cited a survey by the consulting company EY and said that about 56% of Germans who took part in the survey said that they had practically refused to buy new clothes.

Also, 56% of German consumers reported that they now refrain from buying televisions, smartphones, laptops and game consoles. Also, nearly one in two now uses less gasoline, and one in four said they are saving on medications.

What caused the economic crisis in Germany? The main reason is the war in Ukraine and the resulting sanctions by the EU. Also, every second respondent reported that at the moment he could buy only the essentials. According to EY analysts, German households plan to further reduce spending in the coming months. In particular, they plan to save money on food delivery and entertainment.

Earlier, we reported that prices for liquefied natural gas in Asia reached their highest since October.

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