UK economy shrinks in July amid bad weather and doctors’ strikes
LONDON (AP) — The British economy shrank by 0.5% in July amid a series of strikes, particularly by doctors at the start of their careers, and unseasonably wet weather, official figures showed Wednesday.
The Office for National Statistics said the strikes by so-called junior doctors weighed on health sector activity, while the sixth wettest July on record hit retailers after a buoyant June, when business was brisk as a result of warm weather.
Most economists downplayed the prospect that the British economy would fall into recession as monthly growth figures have been yo-yoing up and down as of late. Still, growth is expected to stay tepid.
James Smith, developed markets economist at ING, said a recession “can’t be ruled out” but that the economy “seems to be still growing, albeit fractionally.”
Despite the July retreat, financial markets think it’s more likely than not that the Bank of England would raise interest rates again next week given that inflation of 6.8% is substantially above its target of 2%.
Most economists think the bank will raise its main rate by a further quarter of a percentage point to a fresh 15-year high of 5.5%.
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