The British economy contracted in the three months to September at the start of what is likely to be a lengthy recession, adding to the challenge for British Chancellor of the Exchequer Jeremy Hunt as he prepares to raise taxes and cut spending.
Economic output shrank 0.2 percent in the third quarter, less than the 0.5 percent contraction analysts had forecast in a Reuters poll, official data showed yesterday.
However, it was the first fall in GDP since the start of last year, when Britain was still under tight COVID-19 restrictions, as the economy struggles in the face of a severe cost-of-living crisis.
Photo: Reuters
The Bank of England last week said that the British economy was set to go into a recession that would last two years if interest rates were to rise as much as investors had been pricing.
Even without further rate hikes, the economy would shrink in five of the six quarters until the end of next year, it said.
“Fears of a recession are turning into reality,” said Suren Thiru, economics director for the Institute of Chartered Accountants in England and Wales.
“This fall in output is the start of a punishing period as higher inflation, energy bills and interest rates clobber incomes, pushing us into a technical recession from the end of this year,” Thiru said.
In September alone, when the funeral of Queen Elizabeth II was marked with a one-off public holiday that shut many businesses, the British economy shrank 0.6 percent, the Office for National Statistics said.
That was a bigger monthly fall than a median forecast of a 0.4 percent contraction in the Reuters poll and the largest since January last year, when there was a COVID-19 lockdown.
However, GDP data for August was revised to show a marginal 0.1 percent contraction compared with an original reading of a 0.3 percent shrinkage, and GDP in July was revised up to 0.3 percent from a previous estimate of 0.1 percent.
The upward revisions to July and August’s GDP data mostly reflected new, quarterly figures on health and education output, alongside some stronger readings from the professional and scientific and wholesale and retail sectors, the Office of National Statistics said.
The weak economic outlook provides a tough backdrop for next week’s budget statement by Hunt.
Responding to yesterday’s data, he repeated his warnings that tough decisions on tax and spending would be needed to repair Britain’s public finances and the government’s credibility on economic policy after Liz Truss’s brief spell as prime minister.
“I am under no illusion that there is a tough road ahead -—one which will require extremely difficult decisions to restore confidence and economic stability,” Hunt said in a statement.
“But to achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling. There is no other way,” he added.
ASE Technology Holding Co (ASE, 日月光投控) yesterday launched its second testing facility in San Jose, California, to expand advanced chip testing capacity such as burn-in testing to satisfy customers’ rising engineering needs for emerging semiconductor applications, such as artificial intelligence (AI) and high-performance computing (HPC). ISE Labs Inc, a fully owned subsidiary of ASE, would operate the advanced testing facility. When added to its first facility in nearby Fremont, ISE would double its available research-and-development lab and business space to 150,000m2 in hopes of boosting the US semiconductor supply chain, the company said in a statement. “As the semiconductor manufacturing supply chain reshoring
VALUE: TSMC’s market capitalization far exceeds the combined size of all the Latin American companies on MSCI Inc’s benchmark for emerging markets Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$420 billion equity rally this year would get a valuation test this week when it reports earnings, with analysts expecting the chipmaker to raise full-year sales forecasts. The world’s biggest contract chipmaker would probably report a 29 percent increase in second-quarter net income on Thursday, according to the median estimate of analysts surveyed by Bloomberg. More importantly, analysts from JPMorgan Chase & Co to Morgan Stanley expect it to also raise its full-year sales guidance, justifying another round of valuation expansion. Just like Nvidia Corp, TSMC has become a favorite artificial intelligence (AI)-bet for investors with
ASSASSINATION ATTEMPT: The previous shooting targeting a US president or major party candidate was the 1981 incident targeting then-US president Ronald Reagan Saturday’s shooting at former US president Donald Trump’s election rally raises his odds of winning back the White House, and trades betting on his victory would increase this coming week, investors said yesterday. Trump was shot in the ear during the rally in Pennsylvania on Saturday in what the authorities were treating as an assassination attempt. Trump, his face spattered with blood, pumped his fist moments after the attack, and his campaign said he was fine after the incident. Before the shooting, markets had reacted to the prospect of a Trump presidency by pushing the US dollar higher and positioning for a
President William Lai (賴清德) yesterday thanked memory chipmaker Micron Technology CEO Sanjay Mehrotra for his trust and continued investment in Taiwan, in a rare public meeting with a senior foreign tech executive. It is very unusual for Taiwan’s president to have publicized meetings with senior foreign tech executives, despite the nation being home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), whose chips help to power the surge in artificial intelligence (AI) applications. Lai thanked Mehrotra for “showing trust and support for Taiwan” in a video released by the Presidential Office. “I want to thank Micron for its long-term