BUSINESS LIVE: UK economy shrinks 0.5% in July

Marcus Brookes, chief investment officer at Quilter Investors:

‘As the UK stands at this economic crossroad, two things are clear. Firstly, today’s data will be critical in challenging the country’s economic perceptions and will play a big role in the Bank of England’s future decisions.

‘Secondly, with the election campaigning period looming, the state of the economy will undeniably take centre stage.

‘The UK’s unique set of economic circumstances, coupled with global pressures, means that it remains on a precarious edge, with some even sounding the alarm bells for a potential recession in 2024.’

The UK economy shrank by 0.5% in July after a summer washout and weeks of strike action, sparking fears of a ‘light recession’ later this year.

Data from the Office for National Statistics (ONS) today showed that gross domestic product (GDP) contracted at a sharper rate than the 0.2% decline economists had forecast.

It came after a 0.5% monthly increase in June.

Neil Birrell, Premier Miton chief investment officer and manager of Premier Miton Diversified Growth Fund:

‘The UK economy shrank much more than expected in July, with the services sector notably weak, which may be seen as good news by some, particularly the Bank of England ahead of their meeting to discuss interest rates, although the speed of the slowdown could be indicating that recession is around the corner.

‘Either way, it does suggest that higher interest rates and sticky inflation are having a more significant effect on the economy. All eyes will be on the Bank for the announcement of the rate decision.’

The UK economy contracted by a larger-than-expected 0.5 per cent in July as strikes in hospitals and schools weighed on output, fresh data from the Office for National Statistics shows.