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Highlights
- A Europe-based intergovernmental think tank has warned that the UK is on the brink of a recession.
- The country's economy is estimated to register zero growth in 2023, it said.
- This will make the UK the worst-performing economy in the developed world.
Russia's invasion of Ukraine has put economic growth in the UK in the backseat. The country is facing record-high inflation as the conflict is driving up the prices of food and fuel, which has slowed down the growth. The GDP increased by 0.8% in the three months to March 2022, according to data shared by the Office for National Statistics (ONS) last month.
However, there's no relief in sight anytime soon, and the UK economy may slow to a standstill next year, according to the Organisation for Economic Co-Operation and Development (OECD).
The think tank said the UK is among the most affected countries by the Russia-Ukraine war and is on the brink of a recession. In 2023, the UK will be the worst-performing economy in the developed world, OECD said, adding that it will grow by 3.6% in 2022 before falling to zero next year. On the other hand, inflation is expected to average 8.8% this year and post a slight fall next year at 7.4%, it predicted.
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The estimates are a part of the OECD’s half-yearly economic outlook. According to the analysis, even if the UK manages to avoid a recession, living standards will continue to fall next year, and those on the lowest income will be the hardest hit by soaring inflation.
In wake of the think tank's warning, let us take a look at some FTSE-listed stocks that are more likely to hold up during a recession than others.
GSK Plc (LON: GSK)
Previously known as GlaxoSmithKline Plc, the pharmaceutical giant changed its name last month to GSK Plc. It is demerging its Consumer Healthcare business from the parent company, and the process is expected to be completed by 18 July 2022.
GSK Group currently holds a market cap of £89,021.69 million. Over the past one year, it has provided a return of 29.53% to the shareholders. The year-to-date (YTD) return currently stands at 8.99%. Shares of GSK were trading at GBX 1,743.80, down 0.41% at 8:13 am GMT+1 on 9 June 2022.
Diageo Plc (LON: DGE)
Diageo is engaged in the business of producing, marketing, and selling alcoholic beverages. The company owns over 200 brands and operates in more than 180 countries.
The share value of the FTSE 100 constituent has increased by 5.26% over the past one year. With a market capitalisation of £82,314.17 million, the shares traded at GBX 3,612.50, up 0.35% as of 8:12 am GMT+1 on 9 June 2022.
Diversified Energy Company Plc (LON: DEC)
The independent energy company is in the business of production and marketing of natural gas, crude oil, and condensates. It is listed on the FTSE 250 index.
The company's shares have provided a return of 16.57% to the investors over the past one year, while the YTD return stands at 19.25%. The shares were trading at GBX 125.28, up 0.63%, at 8:12 am GMT+1 on 9 June 2022, with a market cap of £1,058.93 million.
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.
