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Economy contracts by 0.1% in second quarter

Shoppers walk through the rain on Oxford Street in London.

Tolga Akmen/AFP/Getty Images

The U.K. economy contracted in the second quarter of 2022, as the country’s cost-of-living crisis hit home.

Official figures published Thursday showed that gross domestic product (GDP) shrank by 0.1% quarter on quarter in the second three months of the year, less than the 0.3% contraction expected by analysts.

It comes after GDP expanded by 0.8% in the first quarter of the year.

Last week, the Bank of England warned that it expects the U.K. economy to enter its longest recession since the global financial crisis in the fourth quarter. Inflation, meanwhile, is projected to peak above 13% in October.

Monthly estimates showed that GDP fell 0.6% in June, less than the 1.3% consensus forecast, but down from a revised 0.4% expansion in May.

“U.K. growth is stagnating as the economy faces challenges from a severe real income squeeze amid elevated inflation…

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