GDP fell by 0.1% for three months ending 30 June 2022. Follows growth of 0.8% in Q1 2022. UK GDP is now 0.6% above its pre-coronavirus level in Q4 2019.
Broad-based weakness across services, construction and manufacturing sectors sees the UK economy grind to a halt in Q2 2022. In June services fell 0.5%, manufacturing by 1.6% and construction by 1.4%.
Jonathan Moyes, Head of Investment Research, Wealth Club said: “The UK economy has had its fair share of gloomy economic forecasts in recent weeks, to some extent this has helped to set the scene ahead of an equally gloomy Q2 GDP release. With weakness across all main sectors of the economy, the GDP figures released today will do little to alleviate growing concerns over the health of the UK economy.
“For those looking for some balance within the detail of this release, it was hard to find. Even the construction sector, until recently an area of strength, is showing signs of softening.
“Attention will now no doubt turn to the Bank of England. The current inflationary spike is being driven overwhelmingly by global food and energy prices which, by and large, are outside of the Bank’s control. Higher interest rates in the UK will do little to alleviate those pressures. By looking to stave off any knock-on inflationary pressures, such as higher wages, the Bank risks strangling the life out of the economy without significantly easing the cost-of-living crisis. Whilst the Bank expected a slight contraction in Q2 GDP, the mounting weakness in the UK economy may give it pause for thought before continuing to lift rates higher.”