UK economy shrinks by 0.1 per cent

The UK economy shrank by 0.1 per cent in the second quarter of the year, new figures reveal today.

That compares to the first three months of 2022 when gross domestic product (GDP) - which measures economic activity - grew by 0.8 per cent.

According to the Office for National Statistics (ONS), the service sector was badly hit, falling by 0.4 per cent over the quarter between April and June.

A large part of this was in health and social work, and came as less money was spent on the fight against Covid-19.

Raj Kandola (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Although subject to revision, there 's no denying that this morning 's GDP results make for sobering reading.

“Rising prices and falling levels of real pay are having a direct impact on falling household consumption as the effects of the cost of living crisis continue to bite.

“In response to today 's result, the Chancellor rightly referred to the underlying resilience of the economy and as our latest Quarterly Business Report results revealed, domestic sales and turnover projections remain healthy.

“Nevertheless, it 's clear that we need the Government to step up and intervene with direct fiscal intervention as a recession looms on the horizon.

“Reversing the recent NI increases and removing VAT on energy bills along with introducing an energy price cap for SMEs would help to alleviate the huge cost pressures firms are facing right now .

“We can only hope the policymakers act sooner rather than later otherwise businesses up and down the country will be bracing themselves for a very tough few months ahead. ”