(Bloomberg) — The UK economy probably shrank for the first time since the nation was in a coronavirus lockdown at the start of 2021, adding to pressure for action from the contenders vying to take over as prime minister.
Gross domestic product for the second quarter probably shrank 0.2%, according to a survey of economists by Bloomberg News ahead of the official figures due to be published this week.
The drop would mark a pause in the recovery from the pandemic and the start of a more protracted downturn, which the Bank of England expects to last into early 2024. That outlook is roiling the race to replace Boris Johnson as leader of the ruling Conservative Party and prime minister.
Liz Truss and Rishi Sunak, who are competing in the race set to conclude in September, spent the weekend promoting their ideas to help. The central bank last week forecast that inflation will accelerate past a 40-year high to more than 13% this year, weighing heavily on consumer spending power.
Former Prime Minister Gordon Brown and the BOE’s former Chief Economist Charlie Bean this weekend added their voices pushing for an aid package that would help those hardest hit. They say the measures Johnson’s government brought forward earlier this year aren’t enough.
“The main package for households was worth about £15 billion, and there is certainly a case for something of at least that magnitude again,” Bean said in an interview on Times Radio.
Brown called for an emergency budget, warning that almost half of all households will tip into fuel poverty this winter because of a surge in the cost of electricity and natural gas.
“A financial time bomb will explode for families in October as a second round of fuel price rises in six months sends shock waves through every household and pushes millions over the edge,” Brown wrote in the Observer newspaper. He’s scheduled to appear on ITV on Monday.
The remarks and the outlook for rising natural gas prices add to the pressure on Truss and Sunak to explain what they would do to revive the economy.
Truss, the front-runner, has said she’d push through immediate tax cuts to help. Sunak, the former chancellor of the exchequer, says those measures would take too long to implement and wouldn’t help enough of those most in need.
A YouGov poll published on the front page of the latest edition of the Times, which is backing Sunak, suggested that most voters would rather the next prime minister focus on tackling inflation and the looming cost-of-living crisis rather than slashing taxes.
The economic backdrop is deteriorating rapidly as the surge in inflation makes businesses and consumers more cautious about spending.
The GDP report probably will show that the economy shrank 1.2% in June alone, held back in part by bank holidays to mark Queen Elizabeth II’s jubilee.
The BOE warned last week that the UK probably will enter recession in the fourth quarter of this year and keep shrinking for the whole of next year.
Energy prices are the biggest factor weighing on households. Starting in October, utilities will be allowed to charge £4,000 ($4,860) a year for the average power and gas bill, the highest level ever and almost four times the level of a year ago.
The BOE last week said gas futures are now about double the level they were in May, triggering a big increase in the central bank’s outlook for inflation.
Truss spent the weekend drawing attention to her vow for an immediate tax reduction and said that measure could help prevent a recession.
“I do not believe in resigning our great country to managed decline or accepting the inevitability of a recession,” Truss wrote in the Sunday Telegraph. “I would use this to immediately tackle the cost-of-living crisis by cutting taxes, reversing the rise on national insurance and suspending the green levy on energy bills.”
Read more:
UK Energy Price Cap Estimate Tops £4,000 for the First Time
Truss to Speed Up UK Tax Cuts in Leadership Bid, Telegraph Says
BOE Governor Tips Into Political Storm Over Surging UK Inflation
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
