CHIEF European Economist at BNP Paribas, Paul Hollingsworth, believes the UK may be heading towards stagflation.
Making his remark at a recent Partner Economic Forum in London, Hollingsworth said:
“Following the pandemic, the impacts of Brexit and now the Russia-Ukraine conflict, the shocks to the economy and the subsequent impact on inflation are becoming impossible to ignore. This is causing a squeeze on consumer incomes, and we expect to see this continue in the short-term.
“My takeaway is that it looks like we may be heading towards a stagflation environment, but I’m not sure we’re there yet. I don’t think the shock we’re seeing at the moment is going to be a full-blown recession.”
Meanwhile the latest quarterly Federation of Small Businesses (FSB) Small Business Index (SBI) painted a mixed picture across industries as insolvencies doubled.
It found that majority of 1,200 respondents were operating below capacity amid widespread workplace absences.
Close to half of small firms did not expect to grow over the coming year amid a cost-of-doing-business crisis and widening sectoral optimism gap.
Nevertheless, the headline SBI UK confidence reading now stands at +15.3 for Q1 2022, meaning more small business owners expect an improvement in their commercial performance over the coming quarter than expect the opposite. The figure is down 12 percentage points on the same period last year, but is up significantly on Q4 2021 (-8.5).
FSB National Chair Martin McTague said: “It’s encouraging to see small business confidence back in positive territory, though the picture across sectors is distinctly mixed.
“The small business community shrank in size to the tune of hundreds of thousands over the pandemic. With Covid numbers now falling, this needs to be the summer where we start to reverse that trend – policymakers should be doing all they can to facilitate and encourage start-ups and side hustles.”
Automotive and fleet writer for Broker News
