The UK economy is enjoying a ‘weak’ recovery in July amid the heatwave and rising prices

The UK economy recovered slightly in July after contracting in June, but growth has been held back by the searing heatwave and pressure from soaring prices, official figures show.

The Office for National Statistics (ONS) said gross domestic product (GDP) rose 0.2 percent between June and July after falling 0.6 percent in the previous month as output was impacted by the Queen’s Platinum Jubilee bank holiday became.

But growth in July was lower than the 0.3 percent most economists expected, leaving the economy still at risk of falling into recession as the cost-of-living crisis hits households and businesses.

The ONS said GDP was flat in the three months to July compared to the previous three months.

The numbers showed that the services sector was the main driver of the July rebound, growing 0.4 percent over the month.

This follows a 0.5 percent decline in the sector between May and June.

Record hot temperatures in July resulted in some lost workdays, particularly in the construction sector as it was too hot for workers to go to construction sites, while electricity consumption was also lower, impacting the manufacturing industry.

However, the ONS said the rising costs were said to be a particular blow to growth in sectors such as construction.

Yael Selfin, chief economist at KPMG UK, said July growth was “weak”.

“More worryingly, July GDP remains below May levels, indicating an overall contraction in the first two months of summer,” she said.

“This is linked to a pessimistic outlook for the UK economy, which could experience another mild recession from the end of this year, driven by the ongoing decline in household incomes and a rising cost burden for businesses.

“While the nearly $170 billion worth of fiscal measures announced last week

Experts believe the extra holiday for the Queen’s funeral on September 19 could hamper growth again this month, with Pantheon Macroeconomics projecting a 0.2 percent contraction in GDP on the lost working day.

Samuel Tombs, UK chief economist at Pantheon, said this means a technical recession – defined by two consecutive quarters of falling production – is now “in limbo”.

He said that while the government’s move to cap energy prices would help households and businesses, rate hikes would still put pressure on consumers.

He said: “The main threat to the economic outlook now is excessive monetary tightening, but we believe the MPC (Monetary Policy Committee) will see sense soon.”

“Accordingly, we continue to believe that a recession is narrowly avoided in the coming quarters,” he added.

https://www.independent.ie/business/world/uk-economy-sees-feeble-rebound-in-july-amid-heatwave-and-rising-prices-41981345.html The UK economy is enjoying a ‘weak’ recovery in July amid the heatwave and rising prices

Fry Electronics Team

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