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Highlights
- The British Chamber of Commerce (BCC) has predicted that the UK economy will grind to a halt this year.
- Inflation rate is expected to reach 10%, the BCC said.
Just as the UK economy was recovering from the COVID-19 pandemic, the conflict between Russia and Ukraine has put it back under heavy pressure. Growth has slowed down as inflation levels have touched a four-decade high. This has pushed consumer confidence down, and businesses are facing a huge squeeze on profitability.
Moreover, there's further economic gloom on the table for the country, according to an analysis by the British Chamber of Commerce (BCC). It has forecast that this year, the UK economy will grind to a halt before a slight dip into the negative zone.
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For the GDP numbers, the analysis estimated a flatline growth in the second and third quarters of the year on a quarter-on-quarter basis. The situation in the fourth quarter is forecast to get even worse with a 0.2% contraction. For FY2022, the GDP growth prediction has been lowered further to 3.5% from 3.6% earlier.
BCC also expects the inflation rate to touch 10% by the end of this year. Notably, similar predictions have been made by the Bank of England in the past.
Let us now take a look at some stocks that investors may consider during an economic slowdown as they are more likely to hedge inflation than others.
AstraZeneca Plc (LON: AZN)
The FTSE 100-listed pharmaceutical giant is seeking approval for its COVID-19 drug AZD7442 or Evusheld in Japan. Once approved, the drug can be administered to those who cannot take existing COVID-19 vaccines due to pre-existing conditions or other reasons.
AstraZeneca holds a market cap of £155,814.76 million at present, and its shares have given a return of 22.20% to the investors over the past one year. The year-to-date or YTD returns currently stand at 14.48%. Shares of the company were trading at GBX 9,926.00, down 1.29% as of 8:30 am GMT+1 on 10 June 2022.
Centrica plc (LON: CNA)
Centrica plc is an energy company that distributes electricity and gas to its customers in the UK and Ireland. The company has officially applied to reopen Britain's largest gas storage facility that was mothballed years ago.
Shares of Centrica were trading at GBX 81.01, down 1.13% at 8:56 am GMT+1 on Friday, with a market cap of £4,840.64 million. The shares have given a significant return of over 55% to the investors over the past one year. The YTD returns currently stand at 13.39%.
Premier Foods Plc (LON: PFD)
Premier Foods is in the business of manufacturing and distributing food products, with several popular brands under its portfolio like Cadbury, Ambrosia, Lyons, etc.
Shares of the FTSE 250-listed company were trading 1% down at GBX 118.80 as of 8:44 am GMT+1 on 10 June 2022. The share value has appreciated by 9.56% over the past one year, and the YTD returns currently stand at 6.62%. The company has a market capitalisation of £1,035.80 at present.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
