UK Economy Bottoming Out?

UK Economy Bottoming Out?

almost 4 years ago2 mins

A survey of business activity in the UK released on Thursday showed May wasn’t exactly pretty, but it was a masterpiece compared to the record slump of the month before 👨‍🎨

What does this mean?

May’s data is starting to raise hopes that the recent UK economic contraction might be bottoming out – hopes that are being lifted further still by the easing of lockdown restrictions this month. Given that the pandemic’s forced plenty of businesses to shut up shop and their workers to stay at home, it’s not exactly a surprise that business activity continued to contract. The good news is that the contraction was at a slower rate than the previous month.

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The bad news is that the pace of decline is still far worse than at any point during the 2008 financial crisis. In fact, more data released on Thursday showed British factory output has fallen to its lowest level in more than four decades 🏭 No big shocks there, either: collapsing demand and supply chain disruptions have hit Britain’s manufacturers hard.

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Why should I care?

The fallout from coronavirus is pushing Britain’s central bank – which expects the UK economy to shrink by 25% this quarter – to come up with even more ways to juice the economy. The bank even revealed on Wednesday it’s actively considering lowering interest rates into negative territory for the first time in history 📉 And why not: it’s not like the UK government isn’t already selling bonds with negative yields as it is…

While negative interest rates won’t be helpful for savers, they could be for those who are thinking about taking out a mortgage on a property 🏡 And those potential future homeowners had more to cheer about on Thursday: British insurer and real-estate manager Aviva said it expects UK residential property prices to drop 12% what with the whole “pandemic” thing.

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