UK economy did not shrink in Q2 as previously thought

But UK has also recovered less from Covid-19 pandemic than earlier estimates suggested

The UK economy grew 0.2 per cent in the second quarter of 2022, a slightly more positive performance than previously thought.

The Office for National Statistics on Friday announced that a previous estimate of a 0.1 percent decline in GDP for the period had been revised upwards.

It means the economy did not shrink in the three months to June, has previously had been thought.

The change implies that the UK economy is not currently in recession, as the Bank of England had predicted earlier this month.

A technical recession occurs when there are two consecutive quarters of negative growth.

But the revision was not all good news for the economy. Although there was no contraction in the second quarter specifically, the overall position is worse than previously thought.

The ONS said that the level of real GDP was now estimated to be 0.2 per cent below where it was pre-coronavirus at Quarter 4 2019.

This was a downward revision that had put it 0.6 per cent above the pre-pandemic level, meaning the economy had not recovered from the shock as far as had previously been thought.

The outlook for the UK economy took a further major hit this week following a disastrous market response to the government’s budget.

Interest rates are now expected to heat to 6 per cent by the end of the year, raising costs for mortgage holders.

And the central bank was forced to intervene this week to stop the collapse of the UK’s pension sector.

ONS chief economist Grant Fitzner said: “These improved figures show the economy grew in the second quarter, revised up from a small fall.

“They also show that, while household savings fell back in the most recent quarter, households saved more than we previously estimated during and after the pandemic.”