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Britain is struggling with these economic challenges, will the new PM be able to establish fleet

Economy of UK: Rishi Sunak has become the fifth Prime Minister of Britain in 6 years. Britain is currently grappling with economic challenges on many fronts. From day one, the new Prime Minister of Britain will have to formulate a policy to deal with many obstacles. The UK economy is going through a period of lethargy. In his first public statement, Sunak has said that the United Kingdom is a great country, but there is no doubt that we face formidable economic challenges. After all, what economic challenges Sunak is pointing towards, let us understand in detail.

rising inflation

Inflation in the UK reached a 40-year high during the tenure of former British Prime Ministers Boris Johnson and Liz Truss. This has led to a steady increase in the Cost of Living in the UK. Meaning the cost of living has increased in Britain. Britain’s retail inflation rate was 10.1 percent in September. In July, during the tenure of former Prime Minister Boris Johnson, the retail inflation rate was almost at the same level. It was at 9.9 per cent in August but then Prime Minister Liz Truss failed to control inflation. There is a big challenge before the new Prime Minister Rishi Sunak to reduce inflation and reduce the cost of living of the common man.

Slowdown in manufacturing and services sectors

The UK economy is going through a period of lethargy. The S&P Global Composite Purchasing Managers Index (S&P Global’s composite purchasing managers index) dropped to 47.2, its lowest level since March 2021. Former Prime Minister Liz Truss’s decision to cut tax not only affected the pound but also the bond market and saw an increase in interest rates. Manufacturing PMI also declined from 48.4 to 45.8 which is the lowest level since June 2020. At the same time, the services PMI has also come down from 50 to 47.5. If the PMI is less than 50, it indicates contraction, while a figure above 50 indicates growth. Manufacturers have seen a sharp drop in new orders and this indicates that the current slowdown in the UK economy is not going to go away so soon.

rising interest rates

To control inflation, which reached a 40-year high, Britain’s central bank – Bank of England can announce a huge increase in interest rates in next week’s policy meeting. This will increase the burden of borrowers, including home buyers.

UK GDP growth forecast to decline

Britain’s GDP growth has been estimated at 3.3 percent for 2022, 0.2 percent for 2023 and 1 percent for 2024. It may increase or decrease over time. According to estimates, inflation in the UK could reach 13 per cent in 2022. The value of the British pound has also reached almost equal to the dollar.

Corona, Russo-Ukraine war and Brexit also caused damage

Apart from the reasons mentioned above, Britain is also grappling with the economic problems arising out of the Corona epidemic, the Russo-Ukraine war and leaving the European Union in 2020. The new Prime Minister Rishi Sunak will have to find a solution to all these economic problems.

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