UK skates toward stagflation as unemployment, inflation rise and economic growth falters

Quick Take

The United Kingdom’s economy is on a concerning trajectory toward stagflation, a condition characterized by high unemployment, elevated inflation, and stagnant economic growth.

Based on recent data, the unemployment rate has risen to 4.3%, marking a third consecutive increase. This rate, while still at secular lows, indicates an unsettling trend.

Moreover, the Gross Domestic Product (GDP) has evidenced a downturn. The latest data reveals a Month-on-Month (MoM) contraction of 0.5%, a sharper decline than the 0.2% forecasted, alongside a series of other disappointing statistics.

Finally, inflation remains a notable issue. The inflation rate in the UK has been relatively high for several years, persisting at 6.8% Year-on-Year (YOY), which is more than thrice the central bank’s target. This trio of economic burdens – unemployment, negative growth, and high inflation – signals a precarious approach towards stagflation, a scenario that could pose significant challenges to the UK’s economic stability.

UK Data: (trading Economics)
UK Data: (Trading Economics)

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