Fears of a UK recession eased on Monday as new data showed better than expected economic growth in July. The UK economy grew by 0.3% between June and July, according to the Office of National Statistics (ONS). Economists had forecast month-on-month growth of 0.1%, up from 0% in June. Barring a serious relapse in August and September, this suggests that the UK should avoid falling into a technical recession in the third quarter. A recession is defined as two consecutive quarters of recession.
The UK economy shrank by 0.2% in the second quarter of the year and July marks the start of the third quarter. The uptick in growth in July was driven entirely by the service sector, which covers everything from hospitality to banking and is the biggest part of the UK economy. While the figures are from from stellar, after a contraction in the second quarter the chances that we see a negative GDP print in the third have now dropped significantly, meaning that a technical recession will likely be avoided.
About the Author: Glen Callow
