Lloyds Banking Group has raised alarms over a deteriorating UK economy, citing weakening business confidence and rising financial pressures. The warning comes as the European Central Bank (ECB) maintains its current interest rates, with President Christine Lagarde highlighting persistent inflation risks.
UK Economic Outlook Darkens
Lloyds' latest assessment points to slowing growth across key sectors, with manufacturing activity contracting further. The bank's economists note that rising borrowing costs and subdued consumer spending are weighing heavily on businesses.
ECB Holds Firm on Rates
The European Central Bank kept its benchmark rate unchanged at 4.5%, marking the third consecutive pause in its tightening cycle. Lagarde emphasised that while inflation shows signs of easing, the Governing Council remains cautious about premature rate cuts.
Tesla's European Headwinds
Meanwhile, Tesla faces mounting challenges in Europe, with reports of softening demand and increased competition. Elon Musk's electric vehicle giant is grappling with logistical bottlenecks and regulatory scrutiny across key EU markets.
Manufacturing Sector Struggles
The latest Purchasing Managers' Index (PMI) data reveals continued contraction in European manufacturing, with Germany's factory sector particularly hard hit. Analysts suggest the downturn may persist through the third quarter.
Financial markets reacted cautiously to the mixed economic signals, with the FTSE 100 dipping 0.3% in afternoon trading as investors weighed the competing narratives of slowing growth and sticky inflation.
