The UK economy shrank in the spring as Covid and household gloom over the cost-of-living hit growth, new figures revealed today.
Official statistics showed that GDP fell by 0.1 per cent in the three months April to June, despite rising 0.8 per cent in first quarter of the year.
The Office for National Statistics said output was affected by a fall in Covid spending on healthcare and signs that households were tightening their belts amid rising bills.
The service sector was particularly badly hit, falling by 0.4 per cent over the quarter, ONS experts said.
A large part of this was in health and social work, and came as less money was spent on the fight against Covid-19.
GDP fell 0.6 per cent in June - a fall blamed on the bank holidays for the Queen' Platinum Jubilee where a fall in output was not offset by higher spending on food and drink. But the ONS said the Jubilee had a negligible impact on GDP for the quarter in today.
It also revised its May estimate from growth of 0.5 per cent to just 0.4 per cent.
ONS director of economic statistics Darren Morgan said: '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.
'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 UK economy contracted by 0.1 per cent between April and June, compared to growth of 0.8 per cent in the previous three months, the Office for National Statistics said today.
GDP fell 0.6 per cent in June - a fall blamed on the bank holidays for the Queen' Platinum Jubilee where a fall in output was not offset by higher spending on food and drink.
Chancellor Nadhim Zahawi said: 'Our economy showed incredible resilience following the pandemic and I am confident we can pull through these global challenges again.
Energy costs could hit £5,000 a year for the average family by January and the Bank of England warned last week of a recession later this year and inflation hitting 13 per cent.
GDP remains 0.6 per cent above its pre-coronavirus level in the final quarter of 2019 and 2.9 per cent higher than the second quarter of 2021, when the UK was emerging from lockdown.
Chancellor Nadhim Zahawi said: 'Our economy showed incredible resilience following the pandemic and I am confident we can pull through these global challenges again.
'I know that times are tough and people will be concerned about rising prices and slowing growth, and that's why I'm determined to work with the Bank of England to get inflation under control and grow the economy.
'The Government is providing billions of pounds of help for households with rising costs, including £1200 for eight million of the most vulnerable households.'
Alpesh Paleja, the CBI's lead economist, said: 'The fall in activity over Q2 was widely expected, given the impact of the extra Jubilee bank holiday. The economy should return to growth in Q3 as the bank holiday effect comes out of the comparison.
'But this growth won't last. The forthcoming hike in Ofgem's energy price cap will push inflation to new highs, leading to a significant economic downturn.
'Vulnerable businesses and households will be squeezed further, so it's good to see both leadership candidates and the current government signalling further support will be provided to those hit hardest.
'Implementing other pro-growth decisions now – for example, adding flexibility to the Apprenticeship Levy will also pave the way for recovery beyond this crisis.'
English (United States) ·