GDP falls by 0.1% as Covid-19 vaccination programs end

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The UK economy has contracted in the past three months, new data shows, further fueling fears that a recession is imminent.

Gross domestic product (GDP) fell 0.1% in the three months to the end of June, the Bureau of National Statistics (US) said.

It’s a big step back from the first quarter of the year when GDP rose 0.8%.

The services sector was particularly hard hit, dropping 0.4% over the quarter, ONS experts said. Much of this was in health and social work and was because less money was being spent on the fight against Covid-19.

GDP fell 0.6% in June and the ONS revised its May estimate from 0.5% growth to just 0.4%.

Darren Morgan, ONS director of economic statistics, said: “With May growth revised slightly downwards and June a notable decline, the economy generally shrank slightly in the second quarter.

Health was the main reason the economy contracted, as testing, tracking and vaccine programs were halted, while many retailers also had a tough quarter.

“These were partially offset by growth in hotels, bars, hairdressers and outdoor events during the quarter, in part due to people celebrating the platinum anniversary.”

The Bank of England has warned that the UK could slip into recession later this year.