Barret Kupelian, senior economist at PwC, says,
“Today’s release confirms that the UK economy has entered its most challenging period since the beginning of the pandemic. Even though the economy grew by 0.8% in aggregate terms in the first quarter of the year, output came to a standstill in February and contracted in March.
“Compared to its peers, the UK economic performance is mediocre. Unlike some European economies, output continues to remain higher than pre-pandemic levels, but UK performance lags behind that of France, Canada and the US.” (see chart below).
“The UK outlook will continue to remain challenging in the coming months as consumer and business spending cools. This will be further amplified as increases in taxes, such as the national insurance hike and freezing of income tax bands, as well as the rising price of necessities, such as energy and food, redirect and slow down or contract spending in the UK economy. The Russian invasion of Ukraine and the effects of the cost of living crisis have also adversely affected the UK economic outlook in a short period of time.” (See chart below).
Source: OBR, Bank of England
“One of the bright spots in the GDP numbers was the spending on information technology (IT) by businesses in the UK. The persistently strong performance of this sector was first attributed to the switch to working from home. However, it is now apparent that IT spending is likely to continue to grow at robust rates as retail spending continues to digitalise, businesses continue to embrace newer, more flexible working practices and people adjust. “
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 156 countries with over 295,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at PwC.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see how we are structured for further details.
© 2022 PwC. All rights reserved