# Slowdown warnings flash for UK economy as inflation surges
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-22
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: UK Economy Faces Slowdown Amid Rising Inflation and
Meta Description: Explore the signs of strain on Britain's economy, with surging inflation, plummeting consumer confidence, shrinking pay, and more.
URL: https://financedigest.com/slowdown-warnings-flash-for-uk-economy-as-inflation-surgeshtml

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By Andy Bruce and William Schomberg

LONDON (Reuters) – Britain’s economy is heading for a slowdown, or possibly even a recession, as consumers and businesses are hit by the leap in inflation, higher taxes, rising interest rates and uncertainty caused by the war in Ukraine.

Bank of England Governor Andrew Bailey said on Thursday the BoE was walking a tight line between tackling inflation and avoiding a recession.

So far, finance minister Rishi [Sunak has resisted to calls to add to his support](https://www.financedigest.com/uks-sunak-to-halve-support-that-helps-businesses-pay-fuel-bills-the-times.html "UK’s Sunak to halve support that helps businesses pay fuel bills -The Times") for households.

Below is a series of graphics showing some of the signs of the strain on the [world’s fifth-biggest economy](https://www.financedigest.com/at-chinas-largest-trade-fair-exporters-worry-about-world-economy.html "At China’s largest trade fair, exporters worry about world economy").

TOUGH TIMES AHEAD FOR UK [ECONOMY – IMF](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF")

Britain’s [economy will slow in 2022 and faces weaker economic growth](https://www.financedigest.com/visa-revenue-growth-slows-more-as-tough-economy-sobers-spending.html "Visa revenue growth slows more as tough economy sobers spending") and more persistent inflation than any other major rich nation in 2023, the International Monetary Fund forecast this week.

The IMF said its downgrades for 2022 and 2023 reflected “elevated [inflation pressures” and tighter monetary policy](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult").

![](https://onlineworldnews.com/wp-content/uploads/2022/04/73.jpg)

Graphic: IMF predicts weakest growth, highest [inflation for UK in G7 next](https://www.financedigest.com/britains-next-sees-lower-clothing-inflation-shares-dip-on-cautious-outlook.html "Britain’s Next sees lower clothing inflation, shares dip on cautious outlook") year – https://fingfx.thomsonreuters.com/gfx/polling/lbpgnyomjvq/Pasted%20image%201650630827843.png

[INFLATION SURGES](https://www.financedigest.com/boes-bailey-speaks-about-surging-inflation-and-rate-hikes.html "BoE’s Bailey speaks about surging inflation and rate hikes")

The consumer price index jumped to 7% in the 12 months to March, a 30-year high, and is [set to go higher in April when big hikes in power](https://www.financedigest.com/negotiating-our-future-youth-set-to-grab-power-roles-at-cop27.html "‘Negotiating our future’: Youth set to grab power roles at COP27") tariffs kicked in. The government’s budget forecasters said in March that [inflation could touch almost 9% later this year](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister"), depending on energy prices.

![](https://onlineworldnews.com/wp-content/uploads/2022/04/72.jpg)

Graphic: UK [inflation still has some way to go before peaking](https://www.financedigest.com/bank-of-england-raises-rates-to-3-5-says-inflation-has-peaked.html "Bank of England raises rates to 3.5%, says inflation has peaked") – https://fingfx.thomsonreuters.com/gfx/polling/znpnemzmdvl/Pasted%20image%201650632738174.png

CONFIDENCE NOSEDIVES

[Consumer confidence slumped this month to close](https://www.financedigest.com/citigroup-says-will-close-russian-consumer-commercial-business.html "Citigroup says will close Russian consumer, commercial business") to its lowest level since records began nearly 50 years ago, market research firm GfK said on Friday. The [report sent a recession](https://www.financedigest.com/german-economy-expected-to-skirt-recession-economy-ministry-report.html "German economy expected to skirt recession – economy ministry report") warning signal.

Among businesses, optimism dropped for the [third month running](https://www.financedigest.com/russian-services-activity-shrinks-for-third-month-running-in-dec-pmi.html "Russian services activity shrinks for third month running in Dec -PMI") in April and was the lowest since October 2020, according to the S&P Global/CIPS composite Purchasing Managers’ Index.

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/71-1736815844776-compressed.jpg)

Graphic: Are recession bells ringing? – https://fingfx.thomsonreuters.com/gfx/polling/klvyklzjjvg/Pasted%20image%201650631563377.png

SPENDING

[Spending in shops by consumers](https://www.financedigest.com/as-consumer-spending-increases-convenience-and-security-have-never-been-more-important.html "As consumer spending increases, convenience and security have never been more important") fell more than expected in March, adding to a slip in February, according to official data published on Friday. [Volumes are above levels before the pandemic but are lower](https://www.financedigest.com/just-eat-delivers-q3-profit-as-cost-cuts-outweigh-lower-order-volumes.html "Just Eat delivers Q3 profit as cost cuts outweigh lower order volumes") than they would have been without it.

Separate [figures on Thursday showed spending on card payments was 105% of its February](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") 2020 average level in the week to April 14 as work-related spending – includes the purchasing of petrol and diesel – jumped.

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/70-1736815844763-compressed.jpg)

Graphic: UK [retail sales](https://www.financedigest.com/spains-november-retail-sales-fall-0-6-on-year.html "Spain’s November retail sales fall 0.6% on year") losing momentum – https://fingfx.thomsonreuters.com/gfx/polling/xmvjoylqwpr/Pasted%20image%201650632107519.png

SHRINKING PAY, [SAVINGS FALL](https://www.financedigest.com/behind-ftxs-fall-battling-billionaires-and-a-failed-bid-to-save-crypto.html "Behind FTX’s fall, battling billionaires and a failed bid to save crypto")

Britons’ inflation-adjusted earnings shrank by the most [since 2013 in the three months to February](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February"), according to official data.

As the [squeeze on earnings tightens](https://www.financedigest.com/russias-gazprom-tightens-squeeze-on-gas-flow-to-europe.html "Russia’s Gazprom tightens squeeze on gas flow to Europe"), households have been using savings they built up during the coronavirus pandemic. The amount of money households save as a percentage of gross disposable income plus pension accumulations fell back to close to its [pre-pandemic level](https://www.financedigest.com/fraport-sees-2023-passenger-traffic-at-80-90-of-pre-pandemic-levels.html "Fraport sees 2023 passenger traffic at 80-90% of pre-pandemic levels") in the last three months of 2021.

![](https://onlineworldnews.com/wp-content/uploads/2022/04/69.jpg)

Graphic: UK pay, excluding bonuses, [falls in real](https://www.financedigest.com/german-real-yields-fall-to-new-record-lows-on-stagflation-fears.html "German real yields fall to new record lows on stagflation fears") terms – https://fingfx.thomsonreuters.com/gfx/polling/gdvzyawaypw/Pasted%20image%201650633098615.png

EMPLOYMENT HIGH, TOTAL WORKFORCE DOWN

The number of employees in Britain is above its pre-pandemic level, providing a source of strength for the economy. But the [total size](https://www.financedigest.com/automotive-light-bars-market-expanding-at-a-healthy-5-3-cagr-the-market-size-is-projected-to-total-us-1-3-bn-by-2029.html "Automotive Light Bars Market expanding at a healthy 5.3% CAGR, the market size is projected to total US$ 1.3 Bn by 2029") of the workforce, including self-employed people, remains lower than it was in February 2020.

![](https://onlineworldnews.com/wp-content/uploads/2022/04/68.jpg)

Graphic: More employees, but fewer people in work overall – https://fingfx.thomsonreuters.com/gfx/polling/gkvlgkxqopb/Pasted%20image%201650632545498.png

[BANKS BRACE FOR BAD LOANS](https://www.financedigest.com/georgias-tbc-bank-slashes-loan-decision-time-with-fico-solution.html "Georgia’s TBC Bank Slashes Loan Decision Time with FICO Solution")

British lenders expect loan defaults to rise over the coming months and also [plan to rein in mortgage lending by the greatest amount since the early](https://www.financedigest.com/are-the-over-55s-accessing-their-pensions-early-failing-to-plan-for-later-life.html "Are the over-55s accessing their pensions early failing to plan for later life?") days of the COVID-19 pandemic, a Bank of England survey showed earlier this month.

![](https://onlineworldnews.com/wp-content/uploads/2022/04/67.jpg)

Graphic: UK [lenders expect to see defaults on personal loans rise:](https://www.financedigest.com/u-s-mid-tier-lenders-shares-rise-in-frankfurt-after-svb-deal.html "U.S. mid-tier lenders shares rise in Frankfurt after SVB deal") BoE – https://fingfx.thomsonreuters.com/gfx/polling/zdvxogrjlpx/Pasted%20image%201650632639747.png

(Reporting by Andy Bruce and William Schomberg; Editing by Catherine Evans)


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