Even money chance of a recession as growth remains below trend

According to new data from the Office for National Statistics (ONS), the UK’s economy grew by 0.3% in the three months to June, an improvement on the 0.2% figure for the first quarter but lower than last year and below trend. The ONS has said that the growth was driven by partly by retail, which more than offset the decline in output from the manufacturing and construction sectors. It also reported there had been a ‘notable slowdown’ in growth based on last year’s figures.

Head of National Accounts at ONS, Darren Morgan said “While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth.

The economy has experienced a notable slowdown in the first half of this year.”The figures revealed that film production in the UK and box-office receipts from cinemas was one of the best performing sectors in the economy with a growth of 8% in the second quarter. The International Monetary Fund downgraded its forecast for UK economic growth and expects the UK GDP to grow by 1.7% this year instead of the previous projection of 2%.

Fathom Consulting warns that wages are falling behind inflation and that there is a “greater than evens chance of a technical recession in the UK over the next year”.

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