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NIESR: UK GDP to stagnate in May and June, contract -0.4% in Q2 overall

NIESR said the negative growth of -0.3% mom in UK GDP in April “increases the chances of a recession. The impact of rising energy prices is likely to “impede recovery in the coming months. It now forecasts month-on-month GDP growth to “stagnate in May and June, leading to a decline of -0.4% in Q2 overall.

“April’s headline 0.3 per cent fall in GDP hid some strength in private services sectors: strong growth in retail, hospitality and other services suggests that some households may have been able to smooth their consumption in the face of the inflation shock. Manufacturing appears to be suffering as a result of the impact of high petrol and energy, with declines in 8 out of 13 sub-sectors, but April’s overall decline was principally driven by the winding-down of the Test and Trace programme, which had made significant positive contributions to GDP over most of the Covid-19 period”. Rory Macqueen, Principal Economist, NIESR.

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