UK's Economic Contraction: July records a 0.5% GDP drop amid weather and strikes

Posted on September 15, 2023   |  

In July, the UK economy contracted by 0.5%, surpassing expectations of a 0.2% decline, following June's 0.5% growth.

Factors contributing to the contraction included strikes from healthcare workers and teachers, along with record-breaking rainfall affecting various sectors.

Adverse weather conditions particularly affected construction and retail performance during July.

GDP exhibited 0.2% growth in the 3 months leading up to July 2023, compared to the preceding three months until April 2023.

A new Bank of England official cautioned about the potential for 2 years of economic stagnation as measures to combat inflation are implemented.

During the same period, production increased by 0.6%, while services and construction output rose by 0.1%.

Although manufacturing briefly declined due to an extra bank holiday in May, sporting events and increased visits to theme parks provided a modest boost. 

Rising wages suggest the likelihood of higher inflation and interest rates in the upcoming week.