LONDON (Reuters) – Britain’s economy contracted less than expected in the second quarter and in June alone, preliminary data from the Office for National Statistics (ONS) showed on Friday.
Domestic product (GDP) fell 0.1% in the April-June period from the previous quarter and 0.6% in June, the largest monthly contraction since January 2021.
Economists polled by Reuters expected GDP to fall 0.2% in the second quarter from the previous three months and 1.3% in June.
At an annualized rate, British domestic product (GDP) rose by 2.9% in the second quarter.
“It is impossible to say whether the smaller-than-expected contraction reflects a weaker-than-usual negative impact from Queen Elizabeth II’s Platinum Jubilee celebrations or evidence that the economy has considerable underlying momentum,” said Samuel Tombs, economist for consultancy Pantheon Macroeconomics.
The exceptional public holidays granted by the government for the seventy years of reign of the Queen of England subtracted two working days in June.
Although the statistic came in above expectations, it illustrates growing weakness in consumer-related sectors of the economy, such as retail and restaurants, which are most exposed to the cost-of-living crisis.
Finance Minister Nadhim Zahawi, however, said today’s figures show “real strength” in the private sector. But many economists expect a tipping into recession.
The Bank of England warned last week that Britain’s economy is set to experience its longest period of recession since the 2008-2009 global financial crisis and that consumer price inflation is expected to peak at more than 13% on a year in October.
“The UK economy is approaching recession and the worst is yet to come,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.
Separate data released by the ONS showed Britain’s trade deficit widened in June to £22.85bn (€27.04bn) as overseas exports shrank.
(Report Andy Bruce, William James, Farouq Suleiman and Kate Holton, French version Laetitia Volga, edited by Kate Entringer)