UK economy expected to rebound
The UK economy is expected to have returned to growth in June after two consecutive months of declines amid concerns about the impact President Donald Trump’s tariffs have had on the economy.
Economists polled by Bloomberg expect the Office for National Statistics (ONS) to post UK growth of 0.2 per cent for June when the figures are released on Thursday.
The ONS will also provide an estimate for growth in the second quarter of the year, with forecasters claiming growth will be just 0.1 per cent for the period between April and June.
The ONS said the UK economy contracted by 0.3 per cent in April and 0.1 per cent in May as businesses were taken aback by the sudden hit of a global trade war.
Exports of British goods to the US fell by £2bn in April, which represented the largest monthly decrease on record.
Tensions have since calmed after major economies offered President Trump some concessions, with trade deals bringing the effective tariff rate down to around 14 per cent, according to the Bank of England.
Economists at Threadneedle Street also said the effective US tariff rate on the UK dropped from 11 per cent in May to around 8 per cent.
Barclays economist Jack Meaning said a growth spurt in the first three months of the year, shown by a rise in GDP of 0.7 per cent, was largely driven by “temporary factors” including buyers looking to purchase goods before tariffs and taxes hit the UK economy.
The UK economy’s struggles came as companies dealt with the consequences with extra taxes on exports and lower demand for goods in the US.
UK economy on edge pre-Budget
The coming months could see further problems in the UK economy as bosses up and down the country look ahead to the possibility of incoming tax hikes, according to HSBC analysts.
“Consumers, while pessimistic about the economic outlook, are relatively more certain of their own personal financial situations going forward,” said Emma Wilks, economist at HSBC.
“A clear risk lies in the upcoming Autumn Budget, not only in terms of possible policies announced, but also the uncertainty in the lead-up to it.”
In a separate publication on Tuesday morning, the ONS is widely expected to show a softer decline in job numbers than seen in previous months while wage growth is set to fall to 4.7 per cent.
The official statistics body said last month that the number of employees on the payroll dropped by 41,000 in June, though this figure could be made smaller.
Research by the Recruitment and Employment Confederation showed further cuts in payroll budgets at UK companies, with vacancies dropping at a faster pace and smaller pay increases being offered to new hires.