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Investing.com -- Barclays (LON:BARC) has warned that the upcoming five-day strike by National Health Service (NHS) workers will negatively impact the United Kingdom (TADAWUL:4280)’s economic growth in July, potentially reducing real GDP growth by between 6 and 11 basis points.
The British Medical (TASE:BLWV) Association confirmed on Monday that its members will undertake five days of industrial action starting Friday in a dispute over the government’s pay offer for resident doctors.
Reports indicate approximately 50,000 resident doctors are expected to participate, potentially resulting in as many as 250,000 lost working days.
Barclays analysts, in a note on Wednesday, compared the situation to similar historic episodes, particularly the five-day doctors’ strike in June and July 2024, which saw 150,000 work days lost and at least 62,000 appointments postponed or canceled.
During that period, the human health activities sector contracted 1.5% month-over-month, lowering headline GDP growth by just over 8 basis points.
Using time series analysis of data on working days lost to labor disputes, Barclays found that a loss of 150,000 work days would reduce GDP growth by 6 basis points, while a larger reduction of 250,000 work days could reduce GDP by 10 basis points.
Barclays currently forecasts Q3 real GDP to expand by 0.1% quarter-over-quarter, but the negative impact of the strikes suggests a heightened risk that the quarter may actually be flat, with the reduction coming through government consumption.
The bank expects the economy to return to growth in the fourth quarter, assuming no further strikes.