Growth continues to fluctuate considerably on a month-by-month basis and business confidence is continuing to trend downwards.
David Bharier, Head of Research at the British Chambers of Commerce, said the UK economy still faced the risk of recession by the end of 2022.
He made his comments as the last figures from the Office for National Statistics revealed the UK economy grew by 0.2% in July following a sharp drop in the previous month.
The services sector was the biggest contributor to growth, helped by the UK hosting the Women’s Euro Championship. However, while the economy expanded in July, the growth was slower than analysts had expected.
Mr Bharier said: “Today’s estimated rise in monthly GDP for July 2022 by 0.2% shows that growth continues to fluctuate considerably on a month-by-month basis.
“The main driver of growth is the services sector following a fall in the previous month. However, the production and construction sectors have both seen a second consecutive fall in growth.
“The UK economy faces serious immediate and longer-term structural issues which could lead to quarterly recession by the end of 2022, and anaemic yearly growth after that.
“BCC’s research shows that business confidence is trending downwards, with inflation wiping out turnover and profitability for many firms and a record proportion facing recruitment difficulties.
“Last week’s announcement on support for firms’ energy bills will have provided some reassurance to business and should dampen one of the key sources of inflation, but further details of the scheme are needed to restore long-term confidence.
“The Bank of England face a delicate balancing act on monetary policy and while inflation is the dominant issue, further rate raises could compound the economy’s move towards recession.
“Crucially, while the war in Ukraine continues, we are unlikely to see a stabilisation in gas prices, and the economic outlook will remain challenging.”
Join Somerset Chamber of Commerce to give your business a stronger voice both locally, regionally and nationally. Combined with local town chambers, we represent over 2,000 businesses across Somerset with a direct line to policy-makers at all levels.
