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 intensify and health sector output dwindled as Covid cases fell.
Gross domestic product, the measure of the amount of goods and services produced, fell 0.1 percent in the second quarter of the year, after rising 0.7 percent in the previous quarter.
The decline accelerated towards the end of the quarter, with GDP falling 0.6 percent in June, due to two lost working days following the Queen’s platinum anniversary, but the Office for National Statistics said the celebrations had “little impact on the quarterly forecasts.
The figures show that the UK economy was 0.6 percent larger than in the quarter just before the pandemic, but significantly smaller than expected at the time, pointing to lasting damage to economic performance.
Friday’s figures came in close to expectations from economists and the Bank of England. GDP is forecast to pick up in the third quarter before huge increases in energy bills send the UK economy into recession over the winter.
Nadhim Zahawi, the Chancellor, said: “I know times are tough and people will be concerned about rising prices and slowing growth, so I am determined to work with the Bank of England to bring inflation under control. and grow the economy.” he said.