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UK Economy Could Fall Into Recession This Year

UK Economy Could Fall Into Recession This Year

0809 GMT – Economic growth in the U.K. is expected to falter both in 2Q and 3Q, and recession risks are rising due to high inflation, Royal London Asset Management’s senior economist Melanie Baker says in a note. “Consumer confidence has plunged as real pay growth has deteriorated, driven by stubbornly high inflation including exceptional jumps in energy bills and with wage growth still not keeping up,” she says. Persistent supply-chain bottlenecks, labor shortages, tighter monetary and fiscal policy–alongside tense U.K.-EU trade relations–remain challenges for the economy too, Baker says. The U.K.’s GDP expanded by 0.8% on quarter in 1Q, but contracted by 0.1% on month in March, signaling that momentum weakened at the end of 1Q. (xavier.fontdegloria@wsj.com)

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