UK economy shrinks between April and June

• Posted on August 12, 2022August 12, 2022
• by Nana Kwesi Coomson
• Comment

The UK economy shrank between April and June, official figures show.

The economy contracted by 0.1% in the second quarter of the year, the Office for National Statistics (ONS) said.

That compares to the first three months of this year when gross domestic product (GDP) – which measures economic activity – grew.

The Bank of England has forecast the UK will fall into recession towards the end of this year and the downturn will last for the entirety of next year.

As well as releasing figures for the second quarter, the ONS also announced that the economy shrank by 0.6% in June due to the extra bank holiday to celebrate the Queen’s Platinum Jubilee.

However, that figure was much better than the 1.3% fall predicted by economists. The ONS said that while the bank holiday impacted on monthly GDP, it had “little impact” on the quarterly figure.

Commenting on the 0.1% contraction between April and June, the ONS said that the biggest contributor was from “human health and social work activities” as Covid test and trace and vaccination programmes were wound down.

However, it said areas such as tourism, bars and entertainment showed strong growth.

“Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter,” said Darren Morgan, director of economic statistics at the ONS.

“These were partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter, partly as a result of people celebrating the Platinum Jubilee.”

The Chancellor, Nadhim Zahawi, told the BBC that these are “challenging times”.

“What the numbers show today is that the contraction is partly because of some of the Covid activities reducing but also real resilience in the private sector which actually in many ways bodes well… But nevertheless these are challenging times,” he said.

But Labour accused the Conservatives of “losing control of the economy”.

Shadow Chancellor Rachel Reeves said: “With the Bank of England forecasting a recession lasting the whole of next year, the Conservative leadership contenders need to stop playing to the gallery and start coming up with a serious plan to get Britain’s economy back on track.”

-BBC