Britain’s economy is continuing to see a darkening picture as it unexpectedly contracted for a second month in a row in May. This contraction, the first in nearly three years, has fueled fears that the country could go into recession even earlier than markets had expected. Their business taxes, however, have gone up, placed on them by the government. Analysts have been raising alarms that this unexpected move is killing economic growth.
The latest figures indicate that the UK’s Gross Domestic Product (GDP) may contract in the second quarter of the year. This decline is indicative of the overall campaign against transit workers, as the labour market continues to hemorrhage jobs at a record pace. Technological, ecological and geopolitical changes have created a perfect storm of downside risks, heaping further pressure on the country’s economic stability.
Due to these complicating factors, the British pound has been under significant duress. So far this week, the currency has stumbled against nearly all of its major counterparts. The main driver of this underperformance is investors’ concerns over the UK’s economic health. Analysts warn that the combination of shrinking economic output and rising business costs could lead to more significant financial challenges ahead.
Furthermore, the increased business taxes, though designed to shore up government revenue, have ignited controversy over their growth impact. Economists are worried that this policy, by doing still more to dry up investment and job openings, would only compound the lingering economic malaise. The impact on an already-squeezed labour market could make these tax increases self-defeating in practice.