The UK economy contracted by 0.1 per cent between April and June, driven by a decline in spending by households and on fighting coronavirus, compared to growth of 0.8 per cent in the previous three months, the Office for National Statistics has said.
It was the first fall back since the pandemic, in part reflecting time off for Queen Elizabeth II's platinum jubilee celebrations, stoking fears that a recession might be around the corner.
The figure for June showed a 0.6 per cent decline because of the extra holiday at the start of the month, which followed surprise growth in May due to the celebrations.
The state of the economy, and how to tackle the cost-of-living crisis in particular, has been the main focus of the race to become the next UK prime minister.
With energy bills rising steeply, on top of increasing food and fuel prices, Rishi Sunak and Liz Truss have both been setting out plans for tax cuts or extra help for consumers.
Commenting on the gross domestic product (GDP) figures, ONS director of economic statistics Darren Morgan said: “With May’s growth revised down a little and June showing a notable fall, overall the economy shrank slightly in the second quarter.
“Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter.
“These were partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter, partly as a result of people celebrating the platinum jubilee.”
While the economy is expected to stage a technical rebound in the current quarter as the effect of the holiday unwinds, the outlook beyond that is bleak.
With inflation rising and energy prices on course for another eye-watering jump in October, the Bank of England expects the UK to enter a recession at the end of this year and register no growth until the latter half of 2024.
The quarterly reading was a notch stronger than the 0.2 per cent contraction expected by economists and the BoE. It is unlikely to shift the central bank away from further interest rate increases.
Officials have already raised the key rate to 1.75 per cent, from 0.1 per cent in December, and markets are close to pricing in another half-point rise in September.
On Wednesday, BoE chief economist Huw Pill acknowledged that raising interest rates to fight inflation would slow growth but argued that it was necessary to stabilise the economy over the long term.
“While we see increasing signs of underlying weakness in the economy, we expect a more severe downturn to take place only from towards the end of this year,” said Yael Selfin, chief economist at KPMG UK.
The downturn is likely to start in autumn after Ofgem hikes the price cap on energy bills in October by an estimated 84 per cent to £3,634, according to the latest predictions.
The Bank of England has predicted that the economy will shrink in the final quarter of this year and then every quarter in 2023.
Chancellor of the Exchequer Nadhim Zahawi said: “Our economy showed incredible resilience following the pandemic and I am confident we can pull through these global challenges again.
“I know that times are tough and people will be concerned about rising prices and slowing growth, and that is why I am determined to work with the Bank of England to get inflation under control and grow the economy.
“The government is providing billions of pounds of help for households with rising costs, including £1,200 [$1,465] for eight million of the most vulnerable households.”
Alice Haine, personal finance analyst at investment platform Bestinvest, said: “A GDP contraction in the second quarter was always on the cards as the economy — battered by the cost-of-living crisis and the wider global challenges posed by the war in Ukraine — heads towards a recession at the end of the year.
“While a decline of 0.6 per cent in June was lower than expected, it was exacerbated by May’s surprise expansion of 0.4 per cent on the back of the celebrations around the extra Jubilee bank holiday.
“While the withdrawal of the NHS Test and Trace Covid-19 vaccination services was one of the main drivers behind the contraction, the hit to household finances from runaway inflation — as energy and food prices spiralled upwards and fuel also hit record highs in the April to June period — must be factored in too.
“There was a 0.2 per cent decrease in real household consumption in the second quarter as many households slashed budgets and dramatically reduced expenditure to ensure their finances hold up not only this summer but also through the long winter months when energy prices are expected to soar even higher.”
More about Middle East geopolitics
THE SPECS
Engine: 4.0L twin-turbo V8
Gearbox: eight-speed automatic
Power: 571hp at 6,000rpm
Torque: 800Nm from 2,000-4,500rpm
Fuel economy, combined: 11.4L/100km
Price, base: from Dh571,000
On sale: this week
Mohammed bin Zayed Majlis
Racecard
5pm: Al Maha Stables – Maiden (PA) Dh80,000 (Turf) 1,600m
5.30pm: Wathba Stallions Cup – Maiden (PA) Dh70,000 (T) 1,600m
6pm: Emirates Fillies Classic – Prestige (PA) Dh100,000 (T) 1,600m
6.30pm: Emirates Colts Classic – Prestige (PA) Dh100,000 (T) 1,600m
7pm: The President’s Cup – Group 1 (PA) Dh2,500,000 (T) 2,200m
7.30pm: The President’s Cup – Listed (TB) Dh380,000 (T) 1,400m
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
The specs: 2018 Genesis G70
Price, base / as tested: Dh155,000 / Dh205,000
Engine: 3.3-litre, turbocharged V6
Gearbox: Eight-speed automatic
Power: 370hp @ 6,000rpm
Torque: 510Nm @ 1,300rpm
Fuel economy, combined: 10.6L / 100km
Company%20profile
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
KILLING OF QASSEM SULEIMANI
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
Manchester City 4
Otamendi (52) Sterling (59) Stones (67) Brahim Diaz (81)
Real Madrid 1
Oscar (90)
Company%20profile
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West Indies v India - Third ODI
India 251-4 (50 overs)
Dhoni (78*), Rahane (72), Jadhav (40)
Cummins (2-56), Bishoo (1-38)
West Indies 158 (38.1 overs)
Mohammed (40), Powell (30), Hope (24)
Ashwin (3-28), Yadav (3-41), Pandya (2-32)
India won by 93 runs
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RESULTS
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WITHIN%20SAND
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WHAT ARE NFTs?
Non-fungible tokens (NFTs) are tokens that represent ownership of unique items. They allow the tokenisation of things such as art, collectibles and even real estate.
An NFT can have only one official owner at one time. And since they're minted and secured on the Ethereum blockchain, no one can modify the record of ownership, not even copy-paste it into a new one.
This means NFTs are not interchangeable and cannot be exchanged with other items. In contrast, fungible items, such as fiat currencies, can be exchanged because their value defines them rather than their unique properties.
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
