Britain’s economy showed signs of recovery in August following a sharp drop in July, but experts warn that the bigger picture indicates sluggish growth. Official data revealed that economic output grew by 0.2% in August compared to July, aligning with predictions from economists surveyed by Reuters.
However, the initial estimate for July’s decline was revised to show a drop of 0.6%, rather than the previously reported 0.5%. This dip was attributed to the impact of rainy weather and strikes on the economy. The last time the economy contracted by a greater amount on a month-on-month basis was in June 2018, which was influenced by a one-off holiday commemorating Queen Elizabeth’s 70 years on the throne.
Despite the slight recovery in August, concerns about a possible recession loom. To avoid a contraction in the third quarter, the Office for National Statistics (ONS) states that the economy must grow by 0.2% in September, excluding any other contributing factors.
In terms of specific sectors, the data revealed that Britain’s services sector experienced a slightly stronger-than-expected growth of 0.4% in August compared to July. Conversely, manufacturing and construction sectors contracted by 0.8% and 0.5%, respectively.
The Bank of England’s recent interest rate hikes, combined with last year’s surge in inflation, have contributed to the current sluggish growth of the economy. Analysts suggest that these factors, along with the ongoing uncertainty surrounding Brexit, have dampened consumer and business confidence.
While August’s growth offers some relief, experts emphasize the need for sustained economic growth to maintain stability and avoid a potential recession. The data indicates that the recovery must continue throughout the September period to allay concerns.
The Office for National Statistics data was reported by William Schomberg and Andy Bruce, with editing by Kate Holton.
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