By Matthew Ryan – Head of Market Strategy at Ebury International Payment Company

Britain may be moving to recession much earlier than markets expected, as the economy was shrinking for a second consecutive month in May. It will take something special in the United Kingdom to avoid shrinking GDP in the second quarter, which is honestly seems extremely unlikely given the abundance of risks.

Consumers and businesses face huge pressure from many directions. The much -discussed and criticized increase in corporate tax tax is particularly detrimental, as it not only compresses profit margins, but also affects the British labor market, which loses jobs at dizzying speed. The inability of labor to even impose moderate cuts on welfare costs exacerbates the difficult situation as it means that further tax increases are practically inevitable in autumn, which can be a precursor to further difficulties.

The data also increases the chances that the Bank of England will be forced to lower interest rates even from its next August session, with a 25 -point reducing 25% of the Swaps market. This keeps the sterling under pressure this morning, and the English pound this week has been lower than most important coins.