The UK’s GDP is estimated to have grown by 0.2% in July following a 0.6% fall in June, data from the Office for National Statistics (ONS) has indicated.

Monthly GDP is now 1.1% above its pre-pandemic levels from February 2020.

The services sector was the main driver behind GDP growth in July having increased by 0.4%, with the information and communication market’s 1.5% growth the largest contributor to services growth in July.

However, both the production and construction sectors fell, by 0.3% and 0.8% respectively, with July the second consecutive monthly fall for both sectors.

Looking at the broader picture, the ONS reported that GDP was flat in the three months to July, compared with the previous three months. Monthly GDP still grew 2.3% between July 2021 and July 2022, up from 1.9% between June 2021 and June 2022.

Commenting on the the latest ONS figures, chief investment officer at Quilter Investors, Marcus Brookes, said: “Rather surprisingly UK growth bounced back in July after a disappointing figure in June, easing concerns that a recession is on the immediate horizon.

“The general consensus is that the Bank of England (BoE) will continue on its path of increasing rates at its delayed Monetary Policy Committee meeting next week, which will likely follow a further rise in inflation later this week, which will only serve to reaffirm this. The BoE continues to face the incredibly difficult task of guiding the country through this uncertain period, and all eyes will be keenly watching as it makes its next move.

“Positively, 2023 UK GDP forecasts were raised last week after the government announced its plan to freeze energy bills for two years which is expected to lead to a shallower recession and reduced near-term inflation. However, it is also likely to see interest rates pushed higher than originally expected.”

Phoebus Software chief sales and marketing officer, Richard Pike, added: “We have seen a 0.2% uplift in GDP in July, but unfortunately a lot of this will be ironically, and sadly, attributed to the Queens Platinum Jubilee celebrations.

“The funeral on Monday is likely to have a reverse effect on GDP and so it does remain to be seen whether we technically hit a recession sooner rather than later. The oil price cap seems to be affecting the markets positively with prices lowering and this hopefully will assist the long term situation.

“Even though we are in a weeks’ mourning, there are a number of economic statements and announcements that will go ahead this week and that will shape the BoE’s rate decision in key areas such as employment, inflation and retail sales figures.

“Widely a 0.5% increase rate increase is expected and this is only going to squeeze many people’s household budgets, especially those on variable rates. The credit industry is seeing an upward shift in collections activities and this is only likely to continue for the foreseeable future.”

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