KPMG comments on today’s GDP figures
“It is too early to call a recession despite output fall” says Yael Selfin, Chief Economist at KPMG UK.
“It is too early to call a recession despite output fall” says Yael Selfin.
“Temporary factors such as an extra bank holiday and the phasing out of the Test & Trace scheme were behind the fall in GDP in Q2. While we see increasing signs of underlying weakness in the economy, we expect a more severe downturn to take place only from towards the end of this year.
“Households are already bruised by rising inflation, which is putting a squeeze on real incomes, while rising interest rates are making servicing mortgages less affordable. The expected rise in Ofgem’s utility tariff cap this autumn could be the final straw before the UK enters a consumer-driven downturn.
“We expect a slightly shorter and milder recession than the Bank of England pencilled in last week. The main difference stems from our view that energy prices will eventually subside, contributing less to inflation, while the Bank’s forecast means that prices stay elevated over the next three years.”
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