The UK economy shrank by 0.5% in July, according to the Office for National Statistics (ONS), reinforcing fears of a recession in the second half of 2023.
Poor weather conditions and industrial action contributed to the contraction. The ONS said that strikes by junior doctors reduced health service activity, while retailers suffered in the sixth wettest July on record.
All three major sectors - manufacturing, services and construction - also contracted, shrinking for the first time since the summer of last year.
Martin McTague, the national chair of the Federation of Small Businesses, said:
"This fall in GDP will come as little surprise for small businesses, who have endured uncertain trading conditions over a summer marked by poor weather and still-high levels of inflation.
"It is disheartening to see a fall in the three main sectors of services, construction, and production, with the fall in services especially eye-catching due to the dominance of the service sector in the UK economy."
In response to the ONS's findings, Chancellor Jeremy Hunt said:
"Only by halving inflation can we deliver the sustainable growth and pay rises that the country needs".
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