According to data released by the UK National Statistical Office on Tuesday, the gross domestic product of the island country in May rose only by 1.8%. This figure was well below the expectations of 5.5%.
British GDP had undergone a record contraction of 20.8% in April when coronavirus restrictions were the harshest.
The pound was pulled back to 1,2506 against the US dollar. The euro rose to 0.9084 against the pound.
The independent public agency Budget Responsibility Office (OBR), financed by the Treasury Ministry, said on Tuesday that the UK economy could shrink more than 14% this year if coronavirus damage is permanent.
The body whose estimates are used by the government said tax increases or spending cuts would likely be required for compensation.
“Britain is recording its largest GDP drop in 300 years and output is falling by more than 10% in 2020 in all three different scenarios worked on,” the OBR said.
British Manufacturing industry production saw an increase of 8.4% on a monthly basis in May versus a -20.9% expectation and a contraction of -24.4% in April.
On an annual basis, the manufacturing industry production figure was -22.8% in May. The expectation was in a ratio of -23.9%. Total industrial production fell by -20.0% in May versus the expectations for a -20.0% drop. The previous figure was -23.8%.
Imports in China rose for the first time since the coronavirus crisis paralyzed the economy in June. The increase in the demand for commodities was effective thanks to government stimulus.
China’s imports increased by 2.7% in June compared to the previous year. Customs data released on Tuesday exceeded the 10% drop expectations. Imports had fallen 16.7% the previous month.
The supply of medical goods also caused a recovery in exports.
Exports rose by 0.5% unexpectedly in the world’s largest manufacturer. This figure shows that global demand has started to recover again as the anti-virus measures started to push the world economy to the biggest drop of almost 90 years. Analysts were predicting a 1.5% decline after a 3.3% decline in May.
The German ZEW economic research institute revealed that investor sentiment in Europe’s largest economy deteriorated somewhat in July.
The monthly ZEW report, released on Tuesday, shows that despite more positive data, there is a long way to get rid of the coronavirus crisis.
The ZEW Indicator, which monitors the economic sensitivity of investors, fell from 63.4 points in the previous month to 59.3 points that was below the 60.0 forecast by economists.
“The outlook for the German economy has not changed drastically,” said ZEW President Achim Wambach.
The current conditions index of ZEW increased from -83.1 to -80.9 points compared to the previous month — but it is far behind the consensus forecast of -65.0 points.
In Britain, the Conservative Boris Johnson government is expected to announce today a decision to ban the Chinese technology giant Huawei from participation in 5G equipment and services, in an act that would harm its relations with China.
The British government’s position, under pressure from the US Trump administration and ruling party lawmakers, is carefully watched by both Washington and Beijing.
Hours before the Huawei decision, Huawei’s UK manager Lord Browne resigned from his post.
South China Sea
The US State Department denounced all the territorial right claims of the Communist People’s Republic of China in the South China Sea on the grounds that they were unlawful.
US warships navigate the international waters in the South China Sea in the name of maritime freedoms. The British daily The Times reported that the UK would send an aircraft carrier to the region.