.jpg?width=1200&width=1200&auto=webp&quality=75 "UK shrugs off recession as economy grows by 0.2% in second quarter")
he sluggish British economy barely moved out of first gear in the second quarter of the year with growth of just 0.2 per cent in the three months to June.
The meagre GDP growth means that there is no immediate risk of recession – defined as two consecutive quarters of shrinking output – but leaves the UK stuck in a low growth trap.
It marks a fifth consecutive quarter that the economy has “bounced along the bottom” since a 0.5 per cent advance in the first quarter of 2022 when Britain continued to spring back from the pandemic recession. Since then successive quarters have seen growth of 0.1 per cent, minus 0.1 per cent, two more quarters of 0.1 per cent, and today’s figure of 0.2 per cent.
But the ONS said the economy grew by 0.5 per cent in June, a better than expected recovery from the minus 0.1 per cent in May when output was held back by the lost working day for the King’s Coronation celebrations. Growth was 0.2 per cent in April.
City economists said growth continues to be held back by high interest rates that are suppressing demand and increasing the cost of capital.
Chancellor Jeremy Hunt said: “The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.
“The Bank of England are now forecasting that we will avoid recession, and if we stick to our plan to help people into work and boost business investment, the IMF have said over the longer-term we will grow faster than Germany, France and Italy.”
Mr Hunt has said he will support the Bank of England’s policy of hiking the cost of money to bear down on inflation even if it risks causing a recession over the winter.
The Bank last week increased its base rate for the 14th time in succession from 5 per cent to 5.25 per cent. However, many high street lenders are now starting to reduce their fixed mortgage deals on anticipation that the Bank will soon pause its rate rises.
The rate of inflation in July will be revealed next week. It is forecast to have fallen from 7.9 per cent to close to 7 per cent as household energy costs subside.