The UK economy is showing confident recovery rates; however, further growth is threatened by high energy prices and geopolitical tensions in the Middle East, reports CNBC.
In the second quarter, the UK's GDP grew by 0.4% after a 0.6% increase in the first three months of the year. During the same period, corporate investments rose by 1.7%, significantly exceeding experts' expectations, which predicted a 0.5% decline. Sanjay Rajan, chief economist for the UK at Deutsche Bank, noted that these figures allow the country to remain one of the fastest-growing economies among the G7 nations. At the same time, he added that “some slowdown remains likely” amid the pressure of rising fuel costs on household incomes.
In April, the IMF warned that the conflict between the US, Israel, and Iran could have a more significant impact on the country's economic outlook than on other developed nations due to the UK's high dependence on oil and gas imports. The Treasury has already presented Prime Minister Andy Burnham with a worst-case scenario in which next year's economic growth could fall to 0.3% if supply disruptions occur in the Strait of Hormuz. Representatives of Pictet Asset Management also emphasize that current developments are focused on the services sector, while industrial production and construction are experiencing declines.
