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U.K. economy contracts in the second quarter as cost-of-living crisis bites

U.K. economy contracts in the second quarter as cost-of-living crisis bites
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The UK economy slumped in the second quarter of 2022 as the cost-of-living crisis hit the country.

Official figures released on Thursday showed gross domestic product (GDP) contracted 0.1% quarter-on-quarter in the second three months of the year, less than the 0.3% decline expected by analysts. This was after GDP rose by 0.8% in the first quarter of the year.

Last week, the Bank of England warned it expected the UK economy to enter its longest recession since the global financial crisis in the fourth quarter. Inflation is expected to peak above 13% in October.

Monthly estimates showed GDP fell 0.6% in June, below the consensus forecast of 1.3% but up from a revised 0.4% expansion in May.

“UK. growth stagnates as the economy faces challenges from a strong squeeze on real income amid higher inflation and higher interest rates,” said Hussain Mehdi, macro and investment strategist at HSBC Asset Management.

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