According to official estimates, the UK economy shrank 0.1% in the second quarter.
It followed a good first quarter, in which the economy grew 0.8 percent.
Last week, the Bank of England predicted that the UK would slip into a recession in the autumn and could have more than a year of recession next.
While there was some growth in April, May and June in service operations such as travel agents as COVID-19 restrictions were lifted, the end of testing and follow-up initiatives dealt a heavy blow to the economy.
“Health is the biggest reason for the recession as both testing, tracing and vaccine programs are affected,” said Darren Morgan, director of economic statistics at the Office for National Statistics. while many retailers also had a tough quarter.”
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Nadhim Zawahi responded on the release of figures showing the UK economy is shrinking.
“These were partially offset by growth in hotels, bars, hair salons and outdoor events during the quarter, partly because people celebrated the Platinum Jubilee.”
There was a big drop in June of 0.6%, partly due to a significant drop in service spending as coronavirus testing and tracking was phased out, and partly because the Platinum Holiday meant that month has less than two business days.
The UK’s economic performance in the second quarter was worse than that of countries such as Canada, Italy, France and Germany, with fundamental data suggesting economic pressures are starting to affect consumer spending.
Private consumption fell 0.2% in the second quarter – a sign that record-high prices for some products are stopping people from spending.
But it is too early to say that the UK is in a recession, according to KPMG.
“It’s too early to call a recession despite falling output,” said Yael Selfin, chief economist at KPMG UK.
“Households have been hurt by rising inflation, which is putting pressure on real incomes, while rising interest rates are making mortgages worse,” said Ms. more rational.
Prime Minister Nadhim Zahawi told Sky News he rejected the idea that the government had slept through this crisis and blamed Russian President Vladimir Putin for record energy prices.
“I didn’t realize it,” he said, pointing to an existing support package that includes a £400 discount for all households.
However, Mr Zahawi declined to say that more direct help to struggling families would be inevitable this winter.
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Prime Minister Nadhim Zahawi says he is determined
“We are looking at all options for what additional help we can provide to families,” he said.
On the issue of taxing the profits of energy companies, Mr. Zahawi said: “There is no easy answer to this … every decision is a difficult one.”
The latest data comes after dire forecasts from the Bank of England on 15 month recession – five consecutive quarters of recession.
Speaking after the Bank raised interest rates by 50 basis points (0.5%) this month in an attempt to deal with the highest inflation rate in more than 40 years, Governor Andrew Bailey said GDP is likely to decrease to 1.25% by 2023 and 0.25%. in 2024.
If this forecast holds, it would be the first instance of two years of annual economic contraction since the 1960s.
But Ms. Selfin said that KPMG is not as pessimistic as the central bank.
“We expect a recession that is slightly shorter and milder than the Bank of England announced last week,” she said.
“The main difference stems from our view that energy prices will eventually fall, contributing less to inflation, while the Bank’s forecast means prices will continue to rise over the next three years. .”
People are facing huge increases in energy bills, with consulting firm Cornwall Insight predicting that the price cap is expected to reach around £3,582 a year for the average household from October.
This is an increase from £3,359 predicted earlier this monthand compared to last October’s price cap of £1,277.
