Recession fears rock shares and the pound as storm clouds gather around the global economy
Shares and the pound tanked and government borrowing costs soared yesterday as the storm clouds hanging over the global economy darkened.
Official figures showed output in the UK fell 0.3 per cent in April – the second monthly decline in a row – as the economic recovery from Covid went into reverse.
The downturn fuelled fears over the state of the global economy after figures last week showed inflation in the US hit a 40-year high of 8.6 per cent in May.
Production slump: Official figures showed output in the UK fell 0.3% in April – the second monthly decline in a row – as the recovery from Covid went into reverse
Central banks around the world are now raising interest rates in a desperate bid to get inflation back under control.
But it is feared this could tip the economy into recession.
On another bleak day for investors, the FTSE 100 tumbled 1.5 per cent, or 111.71 points, to 7205.81 and the FTSE 250 was down 2.6 per cent, or 513.11 points, to 19160.21.
The losses were mirrored elsewhere with the Dax down 2.4 per cent in Frankfurt, the Cac off 2.7 per cent in Paris and the FTSE Mib 2.8 per cent lower in Milan.
On Wall Street, the Dow Jones Industrial Average fell 2.8 per cent while the S&P 500 was down 3.9 per cent and the tech-dominated Nasdaq shed 4.7 per cent.
Sterling also took a pounding, sinking below $1.22.
And government borrowing costs soared with bond yields up in the US, UK and Europe on expectations of further rises in interest rates.
The US Federal Reserve looks set to raise rates again tomorrow while the Bank of England is likely to strike on Thursday.