UK economy grows more slowly than expected amid cost of living crisis
The UK economy grew more slowly than expected in July as worker shortages and soaring costs weighed on activity amid the heightened risk of recession.
The Office for National Statistics said gross domestic product (GDP) rose by 0.2% in July, after a sharp fall of 0.6% in June when the additional bank holiday for the Queen’s platinum jubilee led to a decline in activity.
City economists had forecast a stronger 0.4% recovery after the fall a month earlier. Reflecting weakness in the economy, GDP growth was flat over the three months to July, with a slump in the UK’s dominant service sector offset by stronger activity in industrial production and construction.
Yael Selfin, the chief economist at KPMG UK, said the “feeble” growth rate in July suggested the economy remained smaller than in May, reflecting a weak summer amid growing concerns over the cost of living.
“This ties into a downbeat outlook for the UK economy which could see another shallow recession from the end of this year, driven by the ongoing squeeze on households’ income and a rising cost burden for businesses,” she said.
The figures come amid growing concern over the strength of Britain’s economy as soaring living costs weigh on households’ spending power. The Bank of England has warned high inflation fuelled by rising energy bills will probably plunge the economy into a lengthy recession this winter.
In her first week as prime minister, Liz Truss announced plans to freeze household energy bills and provide support for businesses in a package of measures to soften the blow from rising prices worth more than £150bn. Economists expect the support will probably prevent a higher peak for inflation and reduce the severity of the looming recession.
It comes as businesses
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