Fears that the UK economy is in the teeth of a sharp slowdown triggered a sector-wide sell-off on London markets today.
The capital’s premier FTSE 100 index slid 1.53 per cent to 7,205.81 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, shed 2.61 per cent to drop to 19,160.21 points.
Figures published by the Office for National Statistics today revealed the UK economy unexpectedly shrank 0.3 per cent in April, prompting investors’ to ditch risky assets on concerns a recession may hit this year.
Markets had expected the economy to grow 0.1 per cent in April. Worryingly, GDP is already headed into reverse before the worst effects of the cost of living crunch show up in the data.
All of the UK’s major sectors suffered contractions and are expected to head even lower as a result of households slashing spending in response to inflation eroding their living standards at the quickest pace on record.
Housebuilders led losses on the FTSE 100, caused by a combination of the cost of living crisis and higher interest rates clouding the outlook for property prices.
Barratt Developments and Taylor Wimpey both lost more than three per cent.
Supermarkets also absorbed heavy blows. Sainsbury’s dropped nearly four per cent, while middle-class favourite and online supermarket Ocado shed 4.01 per cent.
Just nine of the companies listed on the FTSE 100 registered gains today.
The pound extended its poor performance, added to inflationary pressure building in the UK economy.
The pound weakened over one per cent against the dollar to buy $1.2187.