UK economy contracts as households cut spending

The UK economy contracted in the second quarter, with households cutting spending as the cost of living crisis began to bite and health sector output declining as Covid cases fell.

Gross domestic product, the measure of the quantity of goods and services produced, fell 0.1 per cent in the second quarter of the year after rising 0.7 per cent in the previous quarter.

The decline accelerated at the end of the quarter with GDP falling 0.6 per cent in June, reflecting two lost work days from the Queen’s platinum jubilee, but the Office for National Statistics said the celebrations had “little impact on the quarterly estimates”.

The figures show that the UK economy was 0.6 per cent larger than it was in the quarter immediately before the pandemic, but significantly smaller than expected at the time, suggesting lasting damage to economic performance.

The figures on Friday were close to those expected by economists and the Bank of England. A rise in third-quarter GDP is forecast before huge increases in energy bills send the UK economy into recession in the winter.

Nadhim Zahawi, the chancellor, said: “I know that times are tough and people will be concerned about rising prices and slowing growth, and that’s why I’m determined to work with the Bank of England to get inflation under control and grow the economy,” he said.

Source link

Related Articles

Back to top button