By Ian McConnell
THE UK economy grew by 0.2 per cent in July, only half the forecast expansion, official figures showed yesterday as economists flagged a weak outlook.
Comparing the three months to July with the February to April period, the UK economy stagnated, the figures published yesterday by the Office for National Statistics showed.
Economists polled by news agency Reuters had, overall, forecast a 0.4% rise in gross domestic product in July, following a 0.6% month-on-month decline in June related to the Platinum Jubilee bank holiday. The 0.2% growth in July was driven by the services sector, with production and construction output falling.
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ONS data last month showed UK GDP fell 0.1% quarter-on-quarter in the three months to June.
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The National Institute of Economic and Social Research think-tank said in the wake of the July GDP figures: “We still expect the UK economy to contract by 0.1% in the third quarter, with growth slowing as inflation maintains its drag on consumer demand and confidence.”
Stephen Millard, deputy director for macroeconomic modelling and forecasting at the NIESR, declared: “GDP grew by 0.2% in July following the large fall of 0.6 per cent in June…That said, GDP in the three months to July was flat relative to the previous three months and we think the UK economy remains in recession.”
Martin Beck, chief economic adviser to the EY ITEM Club think-tank, said: “Reading through the month-to-month volatility, the economy appears to have little momentum, with the level of output in July broadly the same as in April. It’s touch and go if GDP will see a second successive quarterly contraction in Q3.”
He added: “Last week’s announcement of an energy price guarantee should greatly reduce the risk of the economy experiencing a deep recession, but the next year or so will still be very challenging for the economy. Households still face a further decline in their real incomes during the second half of this year which, even if some can save less and borrow more, will weigh on consumer spending…As things stand, the economy is unlikely to do more than stagnate over the coming year.”
David Bharier, head of research at British Chambers of Commerce, said: “The UK economy faces serious immediate and longer-term structural issues which could lead to quarterly recession by the end of 2022, and anaemic yearly growth after that.
“BCC’s research shows that business confidence is trending downwards, with inflation wiping out turnover and profitability for many firms and a record proportion facing recruitment difficulties.
“Last week’s announcement on support for firms’ energy bills will have provided some reassurance to business and should dampen one of the key sources of inflation, but further details of the scheme are needed to restore long-term confidence.”
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