The UK economy is set to contract in the third quarter after expanding in the previous three months as high inflation hurt consumer demand, the National Institute of Economic and Social Research, or NIESR, said Wednesday.
Gross domestic product is set to drop 0.1 percent in the third quarter after growing 0.2 percent in the three months to June, the think tank predicted.
The NIESR expects growth to slow further beyond the third quarter as inflation drags on consumer demand.
Earlier on Wednesday, ONS data showed that the UK economy expanded 0.5 percent in the month of June amid increased visits to doctors as activity normalized on removal of the Covid-19 restrictions, and a recovery in manufacturing.
Official data revealed weaker output in sectors like hospitality, retail and the arts, suggesting that rising prices may have eaten into discretionary household consumption, the NIESR said.
“More encouragingly, manufacturing had its joint strongest month since November 2020, and construction recorded a seventh consecutive month of expansion,” NIESR Principal Economist Rory Macqueen said.
“With plenty of room for revisions, it looks like touch and go as to whether or not the UK economy entered recession in the second quarter.”
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.
