Britain’s economy expanded at a slower rate than projected in July, increasing the likelihood that a recession has already set in.
The construction industry was hit hard by the rising cost of materials and the rapid increase in energy rates, which dampened electricity demand.
The average forecast called for 0.4% GDP growth from June to July, but actual GDP growth was only 0.2%. Inflation was at a 40-year high of above 10%.
There was no change in GDP in the three months leading up to July from the previous three months.
After contracting by 0.1% in the April-June quarter, the economy may be on course to contract once again in the July-September quarter, according to several experts who analyzed the statistics provided on Monday.
According to PwC economist Jake Finney, “this would be the first time that the UK has been in a technical recession since the end of the lockdown.”
Financial expert Paul Dales from Capital Economics noted, “The disappointingly tiny increase in real GDP in July shows that the economy has little momentum and is probably already in recession.”
The world’s fifth-largest economy, Britain, will be in a recession from the end of 2022 to the beginning of 2024, according to the Bank of England’s forecast in August. Because of the conflict in Ukraine, energy costs have risen, which hurts people’s standard of living.
However, last week, Liz Truss declared that home energy prices would be capped. This, together with an anticipated round of tax cuts, reduced the likelihood of such a long-term blow to the economy, but it will cost Britain’s already strained public finances 100 billion pounds or more.
The Office of National Statistics (ONS) said that anecdotal evidence indicated that energy demand has decreased as a result of the increase in power prices.
There was a change in government because of a 54% increase in electricity costs in the year preceding July.
