‘Feeble bounce back’: UK economy grew less than expected in July

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The UK economy grew by just 0.2% in July, according to the Office for National Statistics.

The figure was below the 0.4% growth expected by economists, and follows a fall of 0.6% in June.

While this means it is 1.1% above pre-coronavirus levels, GDP was still flat in the three months to July compared with the previous three months.

The main factor in July’s figure was the 0.4% growth seen in the services sector, which followed a 0.5% drop between May and June.

Yael Selfin, chief economist at KPMG UK said: “The feeble 0.2% bounce back in July was driven by weak GDP in June due in part to the loss of working days from the Jubilee long weekend.

“More concerning, July’s GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer.

“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.

“While nearly £170bn worth of fiscal measures announced last week may be sufficient to avoid a deeper economic slump, these will be partly offset by tighter Bank of England monetary policy focussed on combating the high levels of inflation.”

It comes a month after the Bank of England forecast that the UK would slip into a recession at the end of this year, which would last until early 2024, due mainly to the increasingly high cost of living.

Last week, Prime Minister Liz Truss announced a massive handout to help people cope with rapidly-growing energy prices, which could ease inflation slightly, but will come at a cost estimated to be at least £100bn.

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