Financial progress slumps as cost-of-living disaster bites

THE COST-of-living disaster helped gradual the UK’s financial progress to a digital standstill in February, with worse predicted for the approaching months.

The Office for National Statistics stated Gross Domestic Product (GDP) grew by simply 0.1 per cent within the second month of the 12 months, regardless of expectations of a 0.3% rise.

The determine was markedly down on the 0.8% enhance seen in January.

The ONS reported the hospitality and leisure sectors had skilled some progress due to Omicron an infection numbers easing in comparison with December and January.

However there have been slowdowns in development industries as enterprise confidence took a knock, with the cost-of-living disaster and excessive vitality payments deterring investments.

GDP was additionally hit as Government spending on the NHS take a look at and hint system and Covid-19 vaccination booster programme slowed in February.

The launch of the figures coincided with the state pension and sure advantages rising by 3.1%, half the present inflation of 6.2%, with worth rises anticipated to exceed 8% quickly.

The fundamental state pension rises by £4.25 every week to £141.85 every week, with the total state pension going up £5.55 every week to £185.15.

The common credit score allowance for a single particular person over 25 rises from £324.84 to £334.91 a month, or £4,019 a 12 months, and youngster profit rises 68p every week for the eldest youngster.

Disability allowance goes up by 3.1% and can mechanically change for recipients.

Economists warned the uplift was not sufficient to offset the cost-of-living disaster.

However Chancellor Rishi Sunak stated he welcomed “the positive growth seen across the economy in February, which continues to recover from the pandemic”.

He stated: “Russia’s invasion of Ukraine is creating further financial uncertainty right here within the UK, however it’s proper that we’re responding robustly towards Putin’s unprovoked invasion.

“We are supporting families with the cost of living with £22 billion of support this financial year, and building a high productivity, low tax economy, including through a tax cut worth up to £1,000 for half a million small businesses.”

But meals financial institution suppliers stated they have been “deeply concerned about the scale of suffering” and warned they have been themselves now struggling to maintain up with “relentless demand”.

In a letter to the Prime Minister, the Independent Food Aid Network, a bunch of 550 meals banks, urged the PM to struggle “rapidly rising levels of poverty, destitution and hunger”.

They stated: “An emergency supply of food cannot resolve someone’s financial crisis and will only act as a temporary sticking plaster. Measures must be urgently introduced to decisively increase people’s incomes through the social security system, emergency cash first support and wage increases combined with job security.”

The community stated individuals have been struggling as the worth of meals, vitality and different necessities rose, whereas these on advantages have been seeing a real-terms minimize as inflation outstrips funds.

UK Liberal Democrat Treasury spokesperson Christine Jardine, the MP for Edinburgh West, stated: “These figures present the financial system is being hit arduous as the price of residing disaster bites. 

“Instead of placing all his vitality into defending individuals and rising the financial system, the Chancellor is in a struggle for his political livelihood after this week’s scandalous revelations. 

“Hard-pressed households are dealing with no finish of hardship with hovering vitality payments and unfair tax hikes and Ministers are sitting on their fingers as each individuals and the financial system undergo.”

Suren Thiru, head of economics on the British Chambers of Commerce, stated of the brand new GDP figures: “The important slowdown in progress signifies that the UK financial system was dropping steam even earlier than the affect of Russia’s invasion of Ukraine.

“Tourism-related industries and lodging companies recorded the strongest enhancements within the month as the tip of Plan B restrictions, and decreased considerations over Omicron, supported exercise.

“However, this was principally offset by a major drop in NHS Test and Trace companies and vaccine exercise in addition to declines in industrial and development output.

“February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth as rising inflation, surging energy bills and higher taxes increasingly damages key drivers of UK output, including consumer spending and business investment.”

Alpesh Paleja, Confederation of British Industry lead economist, added: “Following the bounce at the beginning of the 12 months, it’s no shock that financial progress slowed in February.

“Near-term challenges to the outlook have ramped up since, with a rising cost-of-living crunch set to weigh on progress.

“Businesses are also grappling with headwinds from the Ukraine conflict, which is exacerbating cost pressures and supply chain disruption.”

Separately, the ONS launched a brand new set of figures attributable to a change in how HM Revenue and Customs measures exports to the EU.

While the measure confirmed a 25.4% rise in items exports to the EU in February in comparison with January, this was down 0.3% in comparison with December 2021 underneath the outdated system.

Exports to non-EU nations dropped 6.4% between January and February, the figures present. The UK’s commerce deficit aso widened by £10.2 billion to £54.4bn within the three months to February.



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