ALBAWABA – Data released by the United Kingdom’s (UK) Office for National Statistics showed the UK economy shrinking at the fastest pace in seven months in July, news agencies reported Wednesday.
Britain’s gross domestic product shrank by 0.5 percent in July from June, marking a worse-than-expected contraction, according to Reuters, whose economists predicted a 0.2 percent shrinkage from June.
"Our initial estimate for July shows that GDP fell; however, the broader picture looks more positive, with the economy growing across the services, production and construction sectors in the last three months," ONS director of economic statistics Darren Morgan said, as reported by Agence France-Presse (AFP).
Still, Morgan confirmed the output decline in July, but as a result of the strikes.
"In July, industrial action by healthcare workers and teachers negatively impacted services, and it was a weaker month for construction and retail due to the poor weather," he said.
The UK economy has been suffering from high inflation that is depleting the market's purchasing power - Shutterstock
All major sectors of the economy – services, manufacturing and construction – declined in July, the data showed, according to Reuters, underlining signs that the UK economy is weakening. Perhaps even more than the Bank of England expected, ahead of the central bank’s upcoming interest rate meeting in September.
“Higher interest rates and sticky inflation are having a more significant effect on the economy,” Neil Birrell, chief investment officer at Premier Miton, told Bloomberg. “All eyes will be on the Bank for the announcement of the rate decision.”
The pound sterling fell to $1.2458, after the report, while money markets are pricing in a quarter-point rise to 5.5% with the possibility of a further increase by year’s end, according to Bloomberg. Even as BOE Governor Andrew Bailey has signalled the most aggressive hiking cycle since the 1980s is almost complete.
Britain has endured more than a year of strikes by public and private sector workers as they seek wage rises in the face of high inflation.
