Britain’s economy contracted by 0.2% in July, the first full month after the UK’s vote to leave the European Union, according to the latest numbers from the National Institute of Economic and Social Research (NIESR).
The NIESR’s monthly economic data shows that on a quarterly basis, growth in the UK was 0.3% in the three months up to the end of July, compared with 0.6% growth in the three months to the end of June.
That fall was driven by the contraction in July, which saw economic activity shrink as a result of the economic uncertainty and trepidation brought about by the Brexit vote.
Speaking about the numbers, James Warren, a Research Fellow at the NIESR said:
“We estimate that in the three months to July the UK economy grew by 0.3 per cent, a marked economic slowdown. The month on month profile, suggests that the third quarter has got off to a weak start, with output declining in July. Our estimates suggest that there is around an evens chance of a technical recession by the end of 2017.”
The institute said the numbers should be trated with caution: “Monthly data are volatile and as such we should be cautious about over-interpreting developments in the fundamentals of the economy from any single month.”
Last week, the influential think-tank argued that there is now a 50-50 chance of Britain entering a technical recession in the coming year or so, saying in a statement: “We expect the UK to experience a marked economic slowdown in the second half of this year and throughout 2017. There is an evens chance of a ‘technical’ recession in the next 18 months, while there is an elevated risk of further deterioration in the near term.”
Late on in July, the Office for National Statistics’ official data for the UK’s economic growth showed a better than expected performance for the economy in the second quarter of the year. UK GDP grew by 0.6% in the second quarter of 2016, according to figures released by the ONS beating forecast growth of just 0.5%. On an annual basis, GDP rose by 2.2%, again beating the 2.1% growth predicted.