Mr Johnson's Resignation Comes at a Time of Crisis in the World's Fifth-Larges Economy

Mr Johnson's Resignation Comes at a Time of Crisis in the World's Fifth-Larges Economy


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July 8, 2022 18:08 stream

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The ORGANISATION for Economic Co-operation and Development predicted last month that the UK economy would stagnate, with zero GDP growth forecast for 2023. The UK's economic performance is set to be the "bottom" of the G7 next year.


British Prime Minister Boris Johnson was forced to resign Wednesday after dozens of cabinet members and officials resigned. Johnson's "breaking game" ended the personal political crisis caused by scandals such as "Partygate", but the national crisis he left behind could not be so easily Resolve.

Johnson's resignation comes at a time of crisis for Britain, foreign media reported. The world's fifth-largest economy is Mired in a series of crises including high inflation, the risk of recession and a Brexit hangover. Whoever succeeds Mr Johnson as prime minister will be Tested by the Crises.

Inflation is the Highest in the G7

Mr Johnson's Resignation Speech Trumpeted His Record of Three Years in Office, But the Piction of the Country Looks Very Different.

ONE: high inflation.

With almost all major economies in the world suffering from high inflation as the coronavirus shocks supply chains and the conflict between Russia and Ukraine fuels a surge in energy and food prices, the UK is in a particularly bad position.

The UK now has the highest inflation rate in the Group of Seven leading economies, nearing double digits. The UK consumer price index rose 9.1 per cent in May from a year earlier, hitting a 40-year high following April. The Bank of England expects It to top 11% Later This year.

The International Monetary Fund Said in April that INFLATION WOULD LONGER and GROWTH WOULD BeE SLOWER in the UK THAN OTHER Major Economies.

Factors Such as Brexit and the Depreciation of the Pound Are Thought to have Contributed to the Uk's Higher Inflation than the other Advanced Economies.

Brexit has exacerbated an already severe labor shortage and increased operating costs for businesses. The fall in sterling has also pushed up the cost of imports. The pound has fallen sharply against the dollar over the past year, increasing the cost of imported fuel and energy. Energy PriceS Have Also Been Helped by Britain's Unique System of Capping Energy Prices.

The IMF said the UK's inflation shock was compounded by a tight Labour force and the eurozone's energy crisis, making the UK's inflation problem more intractable and acute than any other major economy.

To make matters' workers, British Incomes have not risen in line with inflation.

Britons are on Course for the Second Biggest Fall in Disposable Income Since RECords in 1964 as a Result of Soaring Energy and Food Prices, Access to the Bank of England.

Wages are no higher today than they were before the 2008 financial crisis, and income growth for poor households has stagnated completely over the past 20 years, according to the Resolution Foundation, a British think-tank.

Flat incomes amid rising food and fuel prices have pushed Britons into their worst cost-of-living crisis in decades, with low-income families forced to choose between "heating and eating". Average annual household energy bills could rise by around 50 per cent TO 0 3,000 This Winter as the uk's Energy Price Cap is Reset in the Autumn.

Sound the recession alarm

Crisis no. 2: The Risk of Recession.

The World's Fifth Larget Economy Has Been on A Slippery Slide This Year.

Gross domestic product almost ground to a halt in February, with growth of just 0.1 per cent month-on-month; It began to contract in March, falling 0.1% month-on-month; It fell for the second month in a row in April, with GDP contracting 0.3 percent month-on-month, with all three major sectors of the economy -- services, manufacturing and construction -- making negative contributions to THE UK's GDP for the first time since 2021.

Earlier this week, The Bank of English is Financial Stability Report saying the outlook for the uk economy had "deteriographing significantly".

The ORGANISATION for Economic Co-operation and Development predicted last month that the UK economy would stagnate, with zero GDP growth forecast for 2023. The UK's economic performance is set to be the "bottom" of the G7 next year.

Gloomy economic data have fuelled fears of a recession in Britain. Measures of household consumer confidence in the UK are at a record low. The U.K. consumer confidence index fell to -41 in June, the lowest level in the 48-year history of the survey , According to Market-Research Firm GFK.

While the COVID-19 pandemic, conflicts between Russia and Ukraine, and various crises caused by sanctions are decisive factors that have dampened the UK's economic growth, the brexit factor is seen as unique to the UK. Economists predict that trade barriers and Labour shortages will Make it Harder for Britain to Cope with high inflation and low geowth than other advanced economies.

The Bank of England has acKnowledged the risk of "stagflation". In May, the bank of engine warned that briTain Faced a diety risk of reception and incalaced of more than

Weak growth will also exacerbate the government debt crisis. Government debt has soared to more than 90 per cent of GDP as a result of numerous bail-outs to help businesses and households cope with the pandemic and energy crisis. That means the next prime minister will Have little room to make big tax cuts or spending promises.

Brexit haangover

Crisis 3: "Brexit" haangover.

Delivering Brexit is seen by Johnson as a Signature Achievement, but buth high inflation and loowth has linked to brexit. Brexit have left a leggacy in travel.

Since the pandemic, the UK has missed out on a significant recovery in trade. Coupled with Mr Johnson's split with the EU, the Leave campaign has failed to deliver on its promise to boost trade after Brexit.

For many businesses, the tariff-free trade deal Britain signed with the EU nearly two years ago has led to a surge in customs paperwork, making it harder to sell to the BLOC's biggest export market, while also increasing the cost of imports. Trade deals With Other Countries have done little to file the gap.

The OFFICE for Budget Responsibility said that while extra trade with other countries could offset the fall in trade with the EU, it had not seen a significant effect so far, so the outlook remained uncertain.

The Uk's Balance of Payments deficit soared to 8.3% of gdp in the first quars of 2022, accounting to official files.

In the face of shrinking foreign trade, the Johnson government is also trying to amend the Northern Ireland Protocol previously agreed with the European Union, and unilaterally initiated domestic legislation to abolish customs procedures for goods crossing between the Island of Great Britain and Northern Ireland. The Move Not only Undermines the Existing TRADING Regime Between The Uk and the EU, but Also Damages Relations with EU Leaders and Could Even Trde War with the EU.

Successor's Challene

British Public OPINION is Already Comparing The Country to the 1970s, when it experienced one of its worst economic crises.

While Mr. Johnson's Resignation is seen as closing a tumultuous chapter in model in models, it remains to be seen whether can hand hand the crarsis.

Berenberg Bank is cautiously optimistic. Kallum pickering, an an an an an ancet the economy friend be mr Johnson was replaced by "the.



SOME ECONOMISTS ALSO Expect Stronger Exports and Investment if A Future Prime Minister Improves Relations with the EU.

Lacks a Clear Strategy and Is Deeply Divided, The Risk of a Major Policy Mistake is very high