British economy under pressure: households cut spending and pound falls

This content was published on Apr 22, 2022 – 09:32
April 22, 2022 – 09:32

(AFP)

In the face of rising inflation, British economic indicators have turned red: households are cutting spending on food and fuel, activity has slowed and the pound against the dollar fell on Friday to its lowest level in a year and a half.

Retail sales fell 1.4% in March in the UK, a significant acceleration of the decline observed in February (-0.5%), although still slightly above the pre-pandemic level, the Office for National Statistics reported on Friday. .

On the same day, the PMI Flash Composite Index, published by S&P Global, showed that the British economy was slowing as consumers began tightening their belts.

Bad economic news pushed the British currency to its lowest level against the dollar since October 2020: at 08:50 GMT it lost 1.10% and traded at 1.2887 dollars to the pound.

According to figures from the Office for National Statistics, food sales fell 1.1% in March and have fallen since November, as Britons have returned to eating in bars and restaurants since the lifting of health restrictions, but also “to the effect of higher food prices.”

For its part, the volume of fuel sales fell by 3.8% in March, and the National Bureau of Statistics notes that “non-essential road trips have decreased as a result of record prices for gasoline and diesel.”

Inflation accelerated again in March in the UK, to 7% year over year, mainly due to food prices, as well as fuel prices.

In addition, electricity bills are skyrocketing and many families have to choose between feeding, heating or clothing.

On Thursday, Bank of England Governor Andrew Bailey warned that the UK was going through “a period of unprecedented turmoil”. He stressed that the issuing bank was looking for “a balance between inflation and the risk of recession.”