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Economy shrinks between April and June

The Office for National Statistics (ONS) has estimated that UK gross domestic product fell by 0.1% over Q2 2022.

Services fell by 0.4%, with the largest impact being health and social work activities. Real household consumption decreased by 0.2% but was offset by net trade.

Monthly estimates published by the ONS show that GDP fell by 0.6% in June alone, following a revised 0.4% in May. This change is attributed to the Platinum Jubilee and an extra working day in May, with two fewer working days in June.

There were positive contributions from customer-facing services, especially travel agencies and tour operators who were back up and running since the end of the COVID-19 pandemic. Accommodation, food service, arts and entertainment all showed an increase.

Compared with Q2 2021, the implied GDP deflator rose by 6.0%, primarily reflecting the 7.3% increase in the price of household consumption expenditure.

The drop in GDP is yet to show further signs of the country going into recession, as the Bank of England has suggested.

A recession is defined as the economy getting smaller for two consecutive quarters, and while there was a drop in Q2, it grew in Q1.

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