Britain’s economic system contracted by 0.1% within the three months to June, in accordance with official figures that exposed the weakening outlook for the UK, which is predicted to enter a recession later this yr.
The dip in output within the second quarter adopted 0.8% progress within the first quarter and was pushed by the well being sector – as Covid testing and the vaccine programme was wound down – and by retail, as family spending fell. Economists had forecast an even bigger fall in output of 0.2% within the second quarter.
Gasoline and electrical energy drove a rise in manufacturing output within the second quarter, and building additionally rose, in accordance with the figures from the Office for National Statistics (ONS).
“Well being was the most important motive the economic system contracted because the test-and-trace and vaccine programmes have been wound down, whereas many retailers additionally had a tricky quarter,” stated Darren Morgan, a director of financial statistics on the ONS.
“These have been partially offset by progress in resorts, bars, hairdressers and outside occasions throughout the quarter, partly because of folks celebrating the platinum jubilee.”
The economic system shrank by 0.6% month on month in June, after 0.4% progress in Might, which the ONS stated was defined partly by the Queen’s platinum jubilee, which led to an extra working day in Might and two fewer working days in June.
The Bank of England has forecast a modest bounceback in GDP within the third quarter to the top of September earlier than a recession starting in October that the central financial institution has predicted will final by means of 2023.
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The price of residing disaster, as inflation heads towards 13% by the top of the yr and power payments soar, is predicted to weigh closely on family spending and pile additional stress on companies which can be already battling rising prices.
James Smith, a analysis director on the Decision Basis, stated: “Whereas the contraction in June partly displays the timing of platinum jubilee financial institution holidays, the economic system has began a troublesome interval on a weak footing. And with the Financial institution of England forecasting that inflation will rise to over 13% in October, and that the economic system will slip into recession in This autumn, the outlook is bleak.
“The primary precedence for the brand new prime minister might be to supply additional focused assist to low- and middle-income households who might be worst affected by the stagflation that already appears to be taking maintain.”
