Inflation: the enemy which Rishi Sunak pledged to “face down” by the end of year – looks to be going nowhere fast, according to data released today, risking growth in the UK economy and sparking fears of recession.
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8.7% in the year to May – no change from April’s figure – represents more pain for struggling households.
And with the Bank of England expected to hike borrowing costs again tomorrow to try and curb inflation, there are warnings mortgage holders could be facing an even bleaker outlook.
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Recession Fears as Inflation Continues to Bite UK Economy
The UK economy has been dealing with significant inflationary pressures in recent months, leading to growing concerns about a potential recession. As the cost of living continues to rise, businesses and consumers are feeling the pinch, further exacerbating the economic uncertainty in the country.
Inflation, which measures the rate at which prices increase, has been steadily climbing in the UK. The latest data from the Office for National Statistics (ONS) revealed that the consumer price index (CPI) hit a four-year high of 3.2% in August 2021, surpassing the Bank of England’s target of 2%. This surge in prices is largely being driven by external factors such as supply chain disruptions, high energy costs, and global shortages of essential goods.
One of the main contributors to inflation has been the rising energy prices. Gas and electricity bills have soared, putting additional strain on households and businesses alike. As the winter months approach, the financial burden is expected to increase further, particularly for vulnerable households already struggling to make ends meet.
The impact of inflation is not limited to individuals. Businesses are grappling with higher input costs, including raw materials, transportation, and labor. Small and medium-sized enterprises (SMEs), in particular, are finding it increasingly difficult to absorb these additional expenses, hampering their ability to invest and grow. This, in turn, hampers job creation and overall economic expansion.
The rise in inflation has also eroded consumer spending power. As prices climb, households are left with less disposable income, leading to a reduction in consumer spending and a potential slowdown in economic activity. This decline in demand can negatively impact businesses, supply chains, and multiple sectors of the economy, triggering a potential downturn.
The continued uncertainty surrounding Brexit is also weighing on the UK economy. The outcome of trade negotiations and the future relationship with the European Union have raised concerns among investors and businesses alike. This uncertainty can lead to a decline in investment and a general reticence to make long-term financial commitments, further stifling economic growth.
To address these challenges, the Bank of England has hinted at potential interest rate hikes, although the timing remains uncertain. Increasing interest rates would aim to control inflation by reducing consumer borrowing and cooling down the economy. However, such a move could also dampen consumer and business confidence, potentially contributing to a further economic slowdown.
The current situation demands a multi-faceted approach from policymakers to restore stability and confidence in the UK economy. Measures such as targeted support for vulnerable households, investments in renewable energy infrastructure to reduce dependence on fossil fuels, and initiatives to boost productivity and innovation can help alleviate inflationary pressures and stimulate economic growth.
Addressing supply chain issues is also crucial. The government must work closely with businesses to identify and alleviate bottlenecks, encourage domestic production, and explore alternative global trade partnerships. By diversifying supply chains, the UK can reduce its vulnerability to global shocks and support domestic industries.
It is essential for the government and relevant authorities to closely monitor the evolving economic situation and respond swiftly and proactively to mitigate the risk of a recession. Balancing the need for inflation control with supporting businesses and households through this challenging period is paramount to stabilize the UK economy and ensure its long-term resilience and growth.
We are already in the big crash, Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated. If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
Recessions are an unavoidable part of the economic cycle; all you can do is prepare for them and plan accordingly. I graduated into a slump (2009). My first job after graduating from college was as an aerial acrobat on cruise ships. Today, I work as a VP for a global corporation, own three rental properties, invest in stocks and businesses, run my own company, and have increased my net worth by $500k in the last four years.
Britan leaders betrayed British people by giving jobs to people with fake profiles who also include foreign country intelligence. Now using recession they will get rid of foreign country presence in their country and get back peaceful life. Which is good. All these intelligence people in IT administration and recruitment are headache to normal people. I have suffered 11 years because of them. If propaganda is right then they have to suffer 11 years of nomadic life without any money in hand, poor family relations and headaches and choitic family life.
I want to diversify my portfolio across different stocks and sectors to minimize risk. I’ve heard of people accruing over $550k during recessions, how do I achieve this?
The greater the automated income you can build, the freer you will become. Taking the first step is the hardest, but 5 houses later living off automated income since July 6, 2016. You’ve got to start taking steps to achieve your goal.
At the very least, I now grasp the concept of leverage.
Creating wealth and financial freedom isn't as tough as many people believe. Building wealth and remaining financially stable indefinitely is a lot easier with the appropriate information. Participating in financial programs and products is the only true approach to make a high income and remain affluent indefinitely.
This fuc**ing sunak are you hear that your country is burning in economy
If you wanna be successful, you most take responsibility for your emotions, not place the blame on others. In addition to make you feel more guilty about your faults, pointing the finger at others will only serve to increase your sense of personal accountability. There's always a risk in every investment, yet people still invest and succeed. You must look outward if you wanna be successful in life.
Think Brexit was a big mistake. Too many lies where told in the build up to the referendum. Think the economy would be much stronger in we stayed in????
Banks have to crash the ecomy to make their system work !
Some economists have projected that both the U.S and parts of Europe could slip into a recession for a portion of 2023. A global recession, define as a contraction in annual global per capita income, is more rare because china and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.
the most effective way to get the economy back on track is to stop the utility companys ie gas electric water company from charging standing charges this will stop greedy companys charging an unfair tax on good people its not neccery and its out of date they earn enoug money besides charging standing charges.
There not fit for purpose sack all politicians and start again
Oh this time, NO EU MEMBRRSHIP TO BAIL US OUT THIS TIME THANK FARAGE & BAWJAWS
This is sadistic pain inflicted on a select few by these bastards.
Anyone else is tired of the fact that if the US sneezes the entire world gets AIDS? If the US creates a "soft landing" everyone else falls into recession / stagflation? If US promotes democracy dozens of nations will crumble as a direct consequence of the democracy export a.k.a. bomb these countries into oblivion, especially if they are not voting for cheap raw resource export.
Billions are spent to Ukraine, while the nations people are suffering from the dire consequences of the inflation courtesy of the FED, ECB, BoE. They printed this insane amount of money, poured into the corporate world, and now ordinary people are paying the price, while the criminal banksters and MPs are running free, on top of that they promote that wage increases have to be stopped. Supporting Ukrainian refugees, financing the war, while their own citizens are not supported at all.
O, they are not hopeful for a recession. They are deliberately engineering one. Just like they did in 2008. The poorer they can make ordinary people the more there is for them. Never see a poor banker.
I have come to the conclusion that when one door closes if you look around properly you’ll see a bigger and better door wide open, I got laid off at work, I felt devastated but due to my predicament and desperation I got introduced to a financial expert by the name Robert Andrew and working with him has been one of the best financial decisions I have made