The Lion Sleeps Tonight

Image source: chrisdorney - Shutterstock

What's going on?

Three lines on a chart late last week showed British economic growth slowed to a mere 0.8% in May, disappointing pundits.

What does this mean?

Despite strong showings from its soccer teams, the UKs post-coronavirus recovery lost a little steam in May. Fresh data out on Friday showed the countrys economy grew just 0.8% compared to the month before barely half what investors were expecting, and a marked slowdown from Aprils 2% rate. While relaxed restrictions saw restaurants, hotels, and movie theaters reopening their doors, increases there were outweighed by contractions in the construction and manufacturing sectors thanks in part to the global microchip shortage dragging down British carmakers.

But it aint all bad, guv. The UK economy is now just 3% smaller than it was before the pandemic and the countrys central bank reckons the difference will have been made up by the end of the year, thanks to plucky Brits spending the savings they accumulated during last years lockdowns.

Why should I care?

The bigger picture: They think its all over…
With Britains economy getting back to winning ways, the Bank of England may soon begin withdrawing some of its antiviral support measures. Thats if nothing derails the recovery a not insignificant risk, given the fast-spreading Delta variants potential to wreak further havoc. Ensuring economic growth continues may yet necessitate further work: just look at China, which decided on Friday to reduce local banks cash reserve requirements in order to boost lending and spending.

Zooming out: Out of puff.
At least one British manufacturer got a boost on Friday: medical device maker Vectura accepted a $1.2 billion takeover offer from American-Swiss tobacco firm Philip Morris International. Ironically, Vectura mainly produces the sort of inhalers used by asthma sufferers a condition that smoking helps trigger. Still, the deal should help Philip Morris towards its goal of $1 billion in annual non-nicotine sales by 2025

Originally posted as part of the Finimize daily email.

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