UK economy grows slower than expected in July

September 12, 2022

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The UK economy grew by 0.2% in July, according to official data, following a sharp drop in the previous month.


The Office for National Statistics said the services sector was the biggest contributor to growth, helped by the UK hosting the Women's Euro Championship. However, while the economy expanded in July, the growth was slower than the 0.3% expansion analysts had expected.


Gross domestic product (GDP) fell by 0.6% in June because of two fewer working days.


Analysts have said the bank holiday for Queen Elizabeth's state funeral on 19 September, as well as the 10 days of national mourning, could impact economic growth and push the UK into recession sooner than originally expected.


Last month, the Bank of England said it expected the UK to fall into recession by the end of this year.


A recession is defined as two consecutive quarters, or three-month periods, of shrinking output and between April and June, the UK economy contracted by 0.1% compared with the previous quarter.


In July, the economy was helped by the Women's Euro Championships, which was won by England, and the Commonwealth Games, with second-hand car sales also adding some strong impetus.


However, there was evidence elsewhere that consumer spending remained under pressure because of rising prices, as inflation reached a four decade high of 10.1% in July.


The ONS said that between May and July, economic growth was flat compared with the previous three months.


The production and construction sectors both shrank in July. Production was hit by a fall in demand for energy such as electricity.


Other economists estimated the UK might see some growth following the government's decision to limit the rise in gas and electricity prices, as well as new Prime Minister Liz Truss's pledge to reverse a 1.25% rise in National Insurance.

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