The UK economy shrank between April and June as experts forecast a gloomy outlook with recession on the horizon. The economy contracted by 0.1% in the second quarter of the year, the Office for National Statistics (ONS) said.
This was partly due to Covid schemes like Test and Trace ending, retail sales falling and the Queen’s Platinum Jubilee bank holiday in June, it said.
The Bank of England has forecast the UK will fall into recession towards the end of the year as energy costs soar.
Despite shrinking between April and June, the UK economy avoided recession because it grew by 0.8% in the first three months of this year. A recession is defined as the economy getting smaller for two consecutive three-month periods.
Up until now most economists – and the Bank of England – did not expect a recession to begin until the final three months of 2022.
Many expected a small rebound in economic growth between July and September. But the latest figures from the ONS have prompted some experts to warn that recession could come earlier than previous predictions.
The National Institute of Economic and Social Research said it expected the UK economy to continue falling over the next three quarters.
Capital Economics said there was now a greater risk that the economy will shrink by 0.2% between July and September before worsening.
But investment bank Goldman Sachs still predicted growth of 0.4% in the third quarter of 2022. A spokesperson said: “We had previously assumed a sharp bounce back in July but now expect a more muted rebound.”