Blueprint for growth needed as economy shrinks by 0.5 per cent - Chamber

The government must use the forthcoming Autumn Budget to set out a blueprint for growth after the UK economy shrank by more than expected during July, business leaders said today.

According to the Office for National Statistics, the economy contracted by 0.5 per cent, with strike action and poor weather having an impact.

All three major sectors - manufacturing, services and construction - contracted for the first time since the summer last year, the ONS said.

Analysts expected gross domestic product (GDP) to fall back by 0.2 per cent, but the ONS said strikes by junior doctors reduced health service activity and retailers that benefited from a warm June suffered during July, which was the sixth wettest on record.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “This morning's GDP figures raise more questions than answers as activity fell in July.

“Whilst we saw a pick-up in activity over a three-month period, strikes and bad weather no doubt had an impact on output.

“Given we are still seeing persistently high wage growth, all eyes will now turn to the Bank of England as to whether they change their stance on raising interest rates.

“With the Autumn Budget around the corner, it is vital the government sets out a blueprint for growth that tackles recruitment challenges, high levels of inflation and supply chain disruption.”