Concerns in UK and Germany fuels fears over health of global economy

A slump in spending in the UK and business confidence in Germany has fuelled fears over the health of the global economy. 

Ahead of this weekend’s meetings of G7 leaders in Bavaria, data from the UK showed consumer spending fell 0.5 per cent in May. 

And business confidence slid in Germany this month, according to data from statistics firm Ifo. 

The figures came just a day after Germany was forced to move one step closer to rationing gas, as economy minister Robert Habeck warned Russia was strangling the country’s supply. 

G7 leaders are due to discuss the economy and, in particular, inflation tomorrow. Energy will also be high on the agenda. 

A senior US official has said that he expected leaders ‘to speak to how can we take steps that further reduce Russia’s energy revenues, and do so in a way that stabilises global energy markets and lessens the disruptions and pressures that we’ve seen’. 

The leaders are also likely to discuss the global food crisis, which has been triggered by Russia’s brutal invasion of Ukraine. 

Retail sales data from the Office for National Statistics (ONS) yesterday showed that Britons were spending far less on food, driving the 0.5 per cent decline in sales in May. 

Prices have been soaring as the conflict in Ukraine has pushed up the cost of essentials grown there such as wheat and sunflower seeds used in cooking oil. 

Kevin Brown, savings specialist at Scottish Friendly, said: ‘As many as 44 per cent of adults, surveyed by the ONS, say they bought less when shopping in the last two weeks.’ 

The slowing sales data will ramp up fears that the UK is headed for a recession. 

Economists are stepping up their bets that the US could be headed for a slump – this week Goldman Sachs said it sees a 30 per cent chance of the US tipping into a recession next year, up from 15 per cent.