Uk economy ‘grinding to a halt’ – and worse is to come

UK economy ‘grinding to a halt’ – and worse is to come

UK economy ‘grinding to a halt’ – and worse is to come
The UK economy is “grinding to a halt”, with a big drop-off in consumer spending damaging private sector firms, a new survey has revealed.
According to S&P Global’s latest purchasing managers’ index (PMI), activity among services firms dropped to a 15-month low of 51.8 in May, below expectations and down sharply from April’s reading of 58.9. A reading above 50 indicates most firms reported growing activity.
There is growing concern Britain is hurtling toward a recession due to living costs accelerating much quicker than forecast at the start of the year.
The survey indicates the economy is “almost grinding to a halt as inflationary pressure rises to unprecedented levels”, according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
Inflation is forecast to climb above 10% after the summer, sparked by the energy watchdog raising the cap on bills again to account for higher wholesale oil and gas prices caused by Russia’s invasion of Ukraine.
These projections, alongside weakening business confidence, indicate “that [the] worse is to come”, Williamson added.
Data published by the Office for National Statistics (ONS) in May showed that the economy shrunk 0.1% in March, indicating output was under pressure even before the cost of living crunch intensified.
The ONS found that services firms’ costs grew at the fastest rate on record this month, with rising wage bills one of the biggest contributing factors.