The U.K. economy grew marginally from April to June, but is expected to contract in the coming quarters as the cost-of-living crisis and higher interest rates weigh on consumers and businesses.
U.K. gross domestic product expanded by 0.2% in the second quarter compared with the first three months of the year, instead of the 0.1% contraction previously estimated for the period, data from the Office for National Statistics showed Friday.
The U.K.’s economy expanded by 0.7% from January to March on quarter.
Revised estimates also show the U.K. economy contracted by a downwardly revised 11.0% in 2020 due to the Covid-19 pandemic, while it expanded by an upwardly revised 7.5% in 2021, the ONS said. The economy is estimated to be 0.2% below where it was at the fourth quarter of 2019, before the pandemic hit, it said.
Economists expect the U.K. economy to struggle in the coming quarters as the boost from the government’s energy relief plan and tax cuts is offset by rapidly increasing borrowing costs.
In a separate release, the ONS said the U.K.’s current account deficit narrowed to 33.8 billion pounds ($37.6 billion) in the second quarter from a revised GBP43.9 billion deficit in the first three months of the year.
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