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.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts