The economy slowed in June, with inflation and an uncertain outlook fueling recession fears.
The Office for National Statistics (ONS) released its monthly GDP growth estimate today (12 August).
It shows that the economy contracted by 0.6% in June, with services being the main driver of the decline, as they fell by 0.5% during the month.
According to the ONS, a drop in human health activities was the main contributor.
Testing and tracing activity declined further and vaccinations continued to slow, following the spring recall campaign.
Production fell by 0.9% in June 2022, after increasing by 1.3% in May.
This is mainly explained by a 1.6% decline in the manufacturing industry after strong growth in May 2022.
Construction also fell 1.4% in June 2022, after seven consecutive months of growth.
Commentators reacted to the news by warning that the situation could get worse.
Mazars Chief Economist George Lagarias said: “UK economic output continues to slow as pressures build on consumers. With inflation above 8%, many UK households are in “recession” long before official figures can confirm it. Higher rates, higher prices and more taxes suppress consumption and sentiment.
“Yet we are still a long way from the point where central banks would stop aggressive tightening. We expect economic pressures to worsen in the near future, at least until prices start to decline materially and the BoE feels comfortable recalling interest rates.
And Phoebus Software’s Director of Sales and Marketing, Richard Pike, comments: “We will no doubt see an influx of incoming communications to various agencies such as Citizens Advice from people not only in financial difficulty today, but who maybe considering how they will do in the future. Would this be a good time for lenders and banks to develop certain staff members so that they can give more generic and unregulated advice on household budgeting and understand in detail the areas of support available today or the measures to come to be able to dialogue with the customers concerned?
“This kind of proactive behavior will certainly give an early view of potentially problematic cases, but just as importantly, build borrower loyalty and be viewed very positively from an ESG perspective, an area that is rapidly becoming more important in our industry. “