Key Points
- Eurozone records two consecutive quarters of negative GDP growth.
- More pain for Brits as Eurozone starts a recession while inflation rates are high; BoE may continue hiking rates.
- Higher costs of living are expected among Eurozone residents.
Financial crisis bites harder on Brits as Eurozone enters recession amid high inflation rates
Eurozone has plunged into a recession sending negative waves through the market. Brits will have to tighten their belts for tougher economic times ahead. The region has been experiencing one of the highest inflation rates this year among the strongest economies hitting over 10% and sustaining for a long time.
The Bank of England has been working hard to combat the rising inflation rates by raising interest rates. Though this has proved effective, they still need to reach the target 2% inflation rate target for ending 2023. This target seems out of reach as time passes, as the hike in interest rates in an already shaken economy has contributed to reversed economic growth.
Market data shows that Eurozone has had two consecutive quarters of reversed GDP growth. The region’s economy shrank by 0.1% in Q1 2023, a similar growth to the final quarter of 2022. That marks the start of a technical recession. The news comes to an already shaken European Stocks Market that is marked to cuts its profitability by almost 50% by the end of the year.
The one currency zone follows Germany into slipping into a recession though the country is fighting to get out of it. Brits will have to tighten themselves more as experts predict a further shrinking of the GDP. Also, the Bank of England needs to find a way to pause rate hikes to avoid embedding the inflation rates.
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