UK economic growth is set to have ground to a halt in July, as consumers swapped spending in shops for drinking in pubs amid the heatwaves and Fifa World Cup, economists think.
Most economists are expecting gross domestic product (GDP) to have shown no growth in July, when the Office for National Statistics (ONS) releases its next dataset on Friday.
It would represent a downbeat start to the leadership of Andy Burnham, who was appointed Prime Minister during the month.
It would also come after Chancellor John Healey insisted that there was an “optimistic story” about the UK economy that was “turning a corner”.
In June, the UK economy grew 0.3% as hospitality and leisure firms received a boost from football fever and the prolonged hot weather.
It meant GDP expanded by 0.4% during the second quarter of the year.
However, economists have predicted that activity was muted in July as other parts of the economy lagged, offsetting the continued World Cup and hot weather boost to hospitality.
In particular, retail and wholesale activity is predicted to have dipped by 0.3% for the month.
Elliott Jordan-Doak, an analyst for Pantheon Macroeconomics, said any decline was “more likely the result of consumers shifting spending to drinking in the pub than a sign of weakening in consumer spending growth”.
It indicates that households may have reprioritised rather than reduced overall spending, despite facing increased energy and fuel costs.
Analysts for Investec said: “After a positive first half of the year, where the UK economy actually outperformed the rest of the G7, growing by 1%, we expect the third quarter will begin with a weaker performance.
“Some evidence of this has already been seen in soft retail sales for the month, whilst we expect the rise in household utility bills due to the 13% uplift to the energy price cap would have had a dampening effect.”
Economists for Deutsche Bank said they were expecting the economy to “slow from its current torrid pace of growth”.
“The real income shock from the Middle East has yet to fully filter through the data,” they said.
“One-offs that have buoyed the economy will also likely unwind. And some budget uncertainty could put households and businesses off from spending.”
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