Minister says ‘no indication’ UK set for recession after economy contracts by 0.5 per cent

The UK economy contracted by 0.5 per cent in July, according to newly released data just published by the Office for National Statistics (ONS).

This came after 0.5 per cent growth in June, the ONS said, and is worse than expected. Economists polled by Reuters had forecast a smaller contraction of 0.2 per cent.

But health minister Maria Caulfield this morning has defended the government’s handling of the economy, tellingly Sky News the data shows the government’s “message on inflation is right” because unless it is reduced, there will be continued economic pressures.

She also cited the impact of strike action on growth figures, a fact which “reinforces our message that we want to get the strike action resolved”.

“Yes, we’re disappointed with today’s figures – there [are] reasons for that”, she said.

Ms Caulfield added there is “no indication” that the UK is heading for a recession.

The economy would need to contract in two consecutive quarters for the UK to be in a recession.

Shadow chancellor Rachel Reeves said in a statement today the economy “remains hostage to the Conservatives’ low growth trap that is leaving working people worse off”.

She added: “After thirteen years of instability, the Conservatives have left the British economy weaker and families having to cope with higher taxes, higher mortgages and higher food and energy bills.

“Labour’s plan for the economy is about boosting growth so we can improve wages, bring down bills and make working people in all parts of the country better off.”

The ONS’ director of economic statistics Darren Morgan said this morning: “Our initial estimate for July shows that GDP fell; however, the broader picture looks more positive, with the economy growing across the services, production and construction sectors in the last three months.

“In July, industrial action by healthcare workers and teachers negatively impacted services, and it was a weaker month for construction and retail due to the poor weather.

“Manufacturing also fell back following its rebound from the effect of May’s extra bank holiday.

“A busy schedule of sporting events and increased theme park visits provided a slight boost.”

In response to the figures, Chancellor Jeremy Hunt said: “Only by halving inflation can we deliver the sustainable growth and pay rises that the country needs.”

He added that there are “many reasons to be confident about the future”, citing the UK being “among the fastest in the G7 to recover from the pandemic”, and the IMF’s assessment that the UK economy will grow “faster than Germany, France, and Italy in the long term”. is the UK’s leading digital-only political website, providing comprehensive coverage of UK politics. Subscribe to our daily newsletter here.