UK Economy Shrinks In 2Q, Sharpening Recession Fear

The United Kingdom’s economy shrank in the three months to June, figures released Friday showed — a smaller-than-expected contraction that nevertheless added to jitters about the rocky months ahead.

The Office for National Statistics said Britain’s gross domestic product fell by 0.1% between April and June, down from 0.8% growth in the previous quarter. GDP shrank by 0.6% in June, and growth estimates for May were revised down from 0.5% to 0.4%.

The statistics office said health spending was the biggest contributor to the fall, as the government scaled down coronavirus testing, contact tracing and vaccination programs.

“Many retailers also had a tough quarter,” said ONS director of economic statistics Darren Morgan. “These were partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter,” partly as a result of celebrations of Queen Elizabeth II’s Platinum Jubilee in June.

The Bank of England, however, says the U.K. will likely fall into recession later this year as a cost-of-living crisis worsens and inflation rises above the current 9.4%.