Market Loop - UK economy grinds to a near standstill

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12th April 2022

Bite-sized business news from the UK and beyond

Good morning Could the fountain of youth have been discovered? Cambridge researchers have rejuvenated a 53-year-old woman’s skin to that of a 23-year-old. The eventual aim is to develop treatments for age-related diseases such as diabetes and heart disease.

Today's stories

UK economy grinds to a near standstill
Sony and Lego invest $2bn in Fortnite maker

ECONOMY
UK economy grinds to a near standstill

What’s going on?
Latest figures showed that the UK economy rose by 0.1% in February, half the 0.2% predicted by economists and well-off January’s 0.8% increase.

Why is this important?

February data from the Office of National Statistics paints two different pictures of the economy. On the one hand there was a resurgence in tourism, leisure and hospitality as pandemic restrictions eased and consumer confidence returned.

But then this was almost completely offset by a slowdown in the production of cars and computers which have been hampered by a global shortage of vital microchips.

It means the UK economy grew at a slower pace than many expected. But it is now 1.5% larger than it was before Covid. Services – 80% of the economy – is 2.1% higher than in February 2020 while manufacturing and production are 1.9% below pre-pandemic levels.

But there are fears that there could be much worse to come as the economy lurches from one crisis to the next.

February was largely unaffected by the war in Ukraine and since the Russian invasion, energy prices and general economic uncertainty has risen.

The 54% increase in the energy price cap and 1.25% increase on National Insurance at the start of this month are expected to squeeze household budgets. And let’s not forget the 30-year-high inflation that is adding further pressure on the Bank of England to raise the cost of borrowing higher and faster.

Zooming out

Last month the government downgraded its economic growth forecasts for 2022 from 6% to 3.8% in response to the growing cost of living crisis and soaring energy prices following Russia's invasion Ukraine.

Many economists believe February’s weak growth figures could signal that a recession is on the horizon, only two years after the UK suffered its biggest economic contraction in 100 years.

Other stories to keep you in the loop

Government weighs up plans to float Channel 4 on the stock market
Thousands of barristers to strike over legal aid fees
M&S slashes the price on everyday essentials amid cost-of-living crisis
Heathrow says it is 'stretched' as it races to hire 12,000 new staff
Energy giant Ineos asks to build fracking test site

GAMING
Sony and Lego invest $2bn in Fortnite maker

Yesterday Epic Games, the maker of the hugely popular Fortnite video game, announced a $2bn round of funding from Sony and Lego to support its growth.

Epic says it will use the new funds to “create new social entertainment exploring the connection between digital and physical worlds.” Otherwise known as the metaverse.

The metaverse – a proposed network of vast digital worlds - is one of the most hyped areas of the tech scene. Last year Facebook even changed the name of its parent company to Meta to signal its intentions of expanding in the space. Since then big names like Samsung and Nike have begun exploring the technology.

Fortnite is arguably the closest thing that currently exists to the metaverse vision with its virtual events like concerts.

The cash injection values Epic at $32bn, an increase of 10% in one year. The line up of investors is not surprising. Sony has already invested $450m into Epic over the years and only last week Lego announced a major deal to create new family-friendly virtual spaces with Epic.

Stat of the day

An estimated 21.5 million trips will be made over the bank holiday, the busiest Easter on record

Interesting links from around the web

10 overrated exercises that PTs want you to skip – and what to do instead
Let’s circle back on that: why people are having 250% more meetings now than before the pandemic
Remove these five things from your CV to help land your next job, experts say.

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Market Loop - UK economy grinds to a near standstill

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