In this
cold, the danger of recession for the second time is seen on the UK. The UK has
announced a lockdown for the prevention of coronavirus throughout England,
which has been in effect since Thursday. Whereas, according to a survey by
financial data company IHS Market, the UK economy was almost flat in October.
The IHS
Market / CIPS Services Purchasing Managers Index (PMI) hit a four-month low of
51.4 in October. It was at 56.1 in September. An index above 50 means growth
and a fall below.
V-Shaped
recovery hopes completely crushed
Samuel
Tombs, Chief UK Economist at Pantheon Macroeconomics, said the hopes for a
V-shaped recovery have been completely wiped out. In the second quarter of 2020
(April-June), Britain's GDP had fallen by 20 per cent. The figure for the third
quarter has not yet arrived, but a strong recovery was seen as early as the
third quarter.
What is
double dip resistance
After a
decline in GDP, when GDP grows in the next quarter and GDP falls again in the
subsequent quarter, it is called double dip resistance. It is also called W (W)
shape recovery.
UK
economy stalled before lockdown-2
IHS market
economist Tim Moore said the October data showed the UK service sector was
almost at a standstill before the lockdown was announced in England. From
Thursday all non-essential shops, pubs and restaurants in England will be
closed for 4 weeks. Only takeaway food serving outlets will be open.
Recovery
journey will be more difficult in 2021
Moore said
that it seems Britain is moving towards double dip resistance in this cold.
Also, the journey of recovery in 2021 is going to be more difficult. There has
been a sharp decline in the new order component of service PMI in the UK.
Service companies have fired employees for the eighth consecutive month.
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