Sign In
New York Business Times Logo
  • Home
  • Business
  • Technology
  • Entertainment
  • Finance
  • Sports
Reading: British economy is stagnating as high interest rates take their toll
Share
newyorkbusinesstimes.comnewyorkbusinesstimes.com
Aa
  • Business
  • Finance
  • Technology
  • Entertainment
  • Sports
Search
  • Business
  • Finance
  • Technology
  • Entertainment
  • Sports
Have an existing account? Sign In
Follow US
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Home » British economy is stagnating as high interest rates take their toll
Business

British economy is stagnating as high interest rates take their toll

Dakota Johnson
Last updated: 2023/11/10 at 8:00 PM
Dakota Johnson
Share
British economy is stagnating as high interest rates take their toll
SHARE

[ad_1]

Contents
Deeper into the numbers: the housing market is dragging back as interest rates rise.International comparisons: a stagnant Europe and a strong United States.The prospects: no growth, but no recession.Quotable: “Puffing very slowly.”What now? The government is making efforts to strengthen the economy.

Deeper into the numbers: the housing market is dragging back as interest rates rise.

After proving unexpectedly resilient this year despite rising costs of living, the UK economy has weakened significantly. The services sector shrank last quarter as the highest interest rates since 2008 weighed on housing construction.

The manufacturing sector also declined, while repairs helped offset the decline in new work in the construction sector.

According to the statistics agency’s monthly breakdown of GDP, the economy grew 0.2 percent in September, slightly more than in August, after a 0.6 percent decline in July.

International comparisons: a stagnant Europe and a strong United States.

Britain’s weak economy reflects stagnation in continental Europe, where eurozone economies shrank 0.1 percent in the third quarter. Germany, the bloc’s largest economy, has narrowly avoided a recession as businesses have been hit by high energy prices and weak demand for industrial goods. Across the region, high interest rates aimed at reducing inflation are weakening economic activity, reducing demand for loans and slowing consumer spending.

This contrasts with the United States, where the economy is growing strongly and defying expectations of a slowdown due to high interest rates. Instead, slowing inflation and a resilient labor market have boosted consumer confidence to spend.

The prospects: no growth, but no recession.

According to the Bank of England, the British economy is not expected to sink into recession, but it will only be able to avoid this distinction by a hair. The central bank forecasts that GDP will rise by just 0.1 percent in the last three months of the year before leveling off in 2024 and early 2025.

This weak outlook is driven by high interest rates, which are expected to take an increasingly heavy toll on the economy. So far, less than half of the full effect of higher interest rates has been felt, the central bank estimates, and policymakers expect the constraint effects to shift from the housing market to business investment and consumer spending.

Quotable: “Puffing very slowly.”

Economists at the National Institute of Economic and Social Research, an independent research body, said this week that they expected “slow” economic growth this year and next, but slightly stronger activity than the Bank of England had forecast.

“The bottom line here is that Britain is almost leveling off and moving very slowly,” says Stephen Millard, deputy director of the institute, “and the precise numbers are almost irrelevant.” About five million people in lower income groups will not see their living standards return to pre-pandemic levels until 2026, the institute predicts.

What now? The government is making efforts to strengthen the economy.

Jeremy Hunt, the Chancellor of the Exchequer, will announce updates to the country’s budget later this month, which he said would focus on “how we get the economy back to healthy growth” through private investment and encouraging more people back to work.

But Mr Hunt is not expected to make substantive changes to taxes or spending because of the constraints imposed by another of his priorities: reducing the national debt as a share of GDP.

Even though it appears the country’s public finances are in better shape than expected, most analysts expect Hunt will wait until closer to the next elections, due in January 2025, to provide fiscal sweeteners. But economists at the National Institute of Economic and Social Research have urged the government to significantly and urgently increase public investment, especially in infrastructure and housing.

Dakota Johnson 10 November 2023 10 November 2023
Share This Article
Twitter Email Copy Link Print
By Dakota Johnson
Dakota Johnson is a highly accomplished business expert known for her profound understanding of the corporate world and the intricacies of entrepreneurship. She embarked on her journey with New York Business Times in 2017 as a business correspondent and has since carved out a distinguished career in the field.
Previous Article Fed’s Mary Daly says it’s ‘too early to declare victory over inflation’ Fed’s Mary Daly says it’s ‘too early to declare victory over inflation’
Next Article Shares of ed-tech company 2U plummet nearly 60% to fall below  on Nasdaq Shares of ed-tech company 2U plummet nearly 60% to fall below $1 on Nasdaq
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Oponion

Deepak Rajaa V M: Architecting Purpose Across Borders

Deepak Rajaa V M: Architecting Purpose Across Borders

Deepak Rajaa’s journey began as a cadet at Sainik School…

3 July 2025

Award-winning British journalist and children’s writer Dawn-Maria France has ventured into animation as a creator and scriptwriter! BY Torie Boyd

Dawn-Maria France is an award-winning British…

21 February 2025

Fake news sites with Russian ties flood the US

In a dwindling field of journalism…

29 January 2025

US added 275,000 jobs in February as growth remains strong: Live updates

If the economy is slowing down,…

29 January 2025

Bitcoin made a great comeback and touched a record high

Bitcoin hit a record high of…

29 January 2025

Britain will cut taxes again as elections approach

Amid weak economic growth prospects, the…

29 January 2025

Your inhalers and EpiPens aren’t very healthy for the environment

A single-use insulin pen changed Brian…

29 January 2025

An upbeat FTC boosts Biden’s efforts to address inflation

An independent federal agency has become…

29 January 2025

Disney to step back from India in mega-deal with Reliance Industries

Walt Disney Co. on Wednesday announced…

29 January 2025

You Might Also Like

Deepak Rajaa V M: Architecting Purpose Across Borders
Business

Deepak Rajaa V M: Architecting Purpose Across Borders

Deepak Rajaa’s journey began as a cadet at Sainik School Amaravathi Nagar, where discipline and civic responsibility were ingrained early,…

3 Min Read
Award-winning British journalist and children’s writer Dawn-Maria France has ventured into animation as a creator and scriptwriter! BY Torie Boyd
Business

Award-winning British journalist and children’s writer Dawn-Maria France has ventured into animation as a creator and scriptwriter! BY Torie Boyd

Dawn-Maria France is an award-winning British journalist and Yorkshire Women's Life Magazine editor-in-chief. Originally from Harrogate, she is also a…

2 Min Read
Fake news sites with Russian ties flood the US
Business

Fake news sites with Russian ties flood the US

In a dwindling field of journalism in the US, a handful of websites have emerged in recent weeks with names…

10 Min Read
US added 275,000 jobs in February as growth remains strong: Live updates
Business

US added 275,000 jobs in February as growth remains strong: Live updates

If the economy is slowing down, no one told the labor market.The Labor Department reported Friday that employers added 275,000…

6 Min Read
New York Business Times Logo

News

  • Sponsored & Guest Post
  • Remove News

CATEGORY

  • Business
  • Finance
  • Technology
  • Entertainment
  • Sports

INFORMATION

  • About Us
  • Contact Us
  • Disclaimer
  • Privacy Policy
  • Terms & Conditions

Social Media

  • Instagram
  • Facebook
  • X
  • Linkedin

© New York Business Times. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?