UK economy growth – latest revealed by Office for National Statistics

Experts are worried this is not enough as costs continue to rise

UK economy growth – latest revealed by Office for National Statistics

The UK’s gross domestic product (GDP) rose by 0.2% in July 2022 following a fall of 0.6% in June 2022, according to the Office for National Statistics (ONS).

While the economy grew, the growth was more modest than expected, which worries some experts in the property industry.

“For many, the cost-of-living crisis is a far more significant threat than the pandemic,” Lewis Shaw, founder of Mansfield-based Shaw Financial Services, said. “If your wages aren’t rising, yet the cost of everything else is, it doesn’t take a genius to determine what happens next.

“Consumer demand will fall, and high street activity will shrink, forcing businesses to lay off staff because of dwindling profits and soaring costs. Add into the mix rocketing mortgage rates, and you’ve got a perfect storm.”

Rob Peters, director of Altrincham-based Simple Fast Mortgage, echoed Shaw’s sentiment, saying that the rising cost-of-living and stagnant wages are two of the biggest challenges at present.

“It doesn’t take a rocket scientist to calculate that if costs go up, but wages don’t, then more people will face poverty,” he added. “This will become more apparent in the coming winter months when energy usage is at its highest.”

Peters believes that even with the new energy price guarantee, many will still face vastly increased costs that they cannot afford.

Read more: What does Truss’s new energy price cap mean for consumers?

“Charities and food banks should expect increased demand for their services this winter as people look for ways to feed and clothe themselves and their families,” he stated. “For businesses, I expect to see a large retreat from the high-street as small businesses look for ways to reduce overheads and a physical shop is a costly overhead. The number of businesses failing due to the cost of materials will also increase.

“But it’s not all doom and gloom. Many will innovate and produce creative and successful alternative businesses.”

For Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub, the biggest concern regarding the economy right now is the possibility of “a run on the pound.”

“Some analysts are predicting sterling could soon reach parity with the US dollar,” he said. “With oil and gas imports priced in the greenback, that would be highly inflationary in the short term and a disaster for the economy.

“There’s no denying business confidence is at rock bottom right now. But often, things aren’t as bad as they first seem, and I suspect inflation will start falling just as quickly as it’s risen.”

Read more: What impact is the economic climate having on brokers' customers?

ONS said that looking at the broader picture, GDP was flat in the three months to July compared with the previous three months. Monthly GDP is now estimated to be 1.1% above that of February 2020, just before pandemic lockdowns and restrictions were implemented.

Meanwhile, ONS data also showed that services – the main driver to the rise in GDP – grew by 0.4% in July 2022, after a fall of 0.5% in June. Information and communication grew by 1.5% and was the largest contributor to services’ growth in July.

Production fell by 0.3% after a fall of 0.9% in June 2022 - this was mainly because of a fall of 3.4% in electricity, gas, steam, and air conditioning supply.

Construction also fell in July 2022, by 0.8%, after a fall of 1.4% in June 2022. The decrease in monthly construction output in July 2022 came solely from repair and maintenance, which fell 2.6%.

Output in consumer-facing services grew by 0.6% in July 2022, following flat growth in June 2022.