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Inflation, Shortages, and slow growth for the UK economy

Britain’s economic recovery after lockdowns seems to be slow with increasing inflation and shortages. The country still suffers from problems in supply chains, while there is a risk of a surge in unemployment. This situation is complicating the duty of policymakers to drive the recovery.

Andy Haldane, a chief economist and former Bank of England, says that Britain is in a mean era of low expansion and volatile inflation.

Financial markets now believe that the Bank of England is not about raising interest rates. Some economists are worried about signs of a failing recovery.

INFLATION

In August, Britain’s inflation rate hit its highest 3.3% in almost a decade. Several factors are estimated for the record rise from July. However, the Bank of England believes that inflation is going over 5%, more than double its 2.1% target. The Bank of England tries to examine all signs, but customers are losing confidence that inflation will remain in the longer run.

According to a YouGov survey, public expectations for inflation for the next year increased this September sharply. These results, according to a survey, might change the minds of rate-setters. They announced last month that the case for raising rates was gaining its strength. 

Supply chain obstacles

According to the latest IHS Markit survey of businesses, there have been no positive supply chain changes, while British manufacturers’ staffing obstacles deal with massive delays from suppliers. This situation was clear even before people started panic-buying at petrol stations, created by a shortage of workers and tanker drivers. It resulted in the most significant drop in car traffic since the beginning of June. That served as another negative sign for the UK economy.

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