KPMG comments on today’s GDP figures

“Squeeze on consumers spells trouble ahead for the UK economy” says Yael Selfin, Chief Economist at KPMG UK.

“After a relatively strong growth at the start of the year, the outlook looks increasingly fraught. While we do not yet see a recession coming this year, weak growth means that additional shocks or spillovers from other economies make this scenario increasingly likely.

“The squeeze on consumers has tightened from the second quarter of this year, with the increase in energy tariffs and the higher cost of food and other commodities arising from the conflict in Ukraine, pushing up the cost of living. At the same time, tighter financial conditions and rising interest rates have seen the cost of borrowing increase.

“The squeeze could lead to a modest fall in GDP as early as the second quarter of this year. Annual growth in 2022 is expected to reach 3.7%, however this figure is flattered by weak economic performance during 2021.

“UK GDP fell by 0.1% in March, after revised no growth in February, while quarter on quarter growth was a healthy 0.8%. This reflected the January bounce-back from the downturn induced by the Omicron variant, and was followed by two months of setbacks to growth.”

 

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