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Gloucestershire Business News

Hopes rise that UK may avoid recession

Hopes are rising that the UK may dodge a recession.

Figures from the Office for National Statistics showed the economy grew by 0.2 per cent in July following a 0.6 per cent slump in June.

Output was boosted by the Women's Euro 2022 football tournament, which England hosted and won. The figures raised hopes that recession can be avoided - or at least shortened, the Mail reported.

Daniel Mahoney, UK economist at lender Handelsbanken, said July's return to growth combined with Prime Minister Liz Truss's energy bill cap meant it was now "very plausible that the UK will avoid a recession in the next 18 months".

The pound has rallied back above $1.17 as Sterling climbed by around 1 per cent against the dollar after hitting a 37-year low of $1.14 last week.

However, the Mail said the UK isn't completely out of the woods. July's growth in output of 0.2 per cent fell short of experts' predictions of 0.3 per cent as activity in the manufacturing and construction sectors continued to slow.

The return to growth fuelled some economists' hopes that the UK will now dodge a recession, but others feared the lacklustre figures meant the country was already in a downturn.

The Mail quoted Elizabeth Martins, senior economist at HSBC, as saying the economy had "largely stagnated since the start of the year, and there is a risk that it is already in recession".

Defined as two consecutive quarters of contracting output, a recession would be recorded if the economy shrank again between July and September, following the 0.1 per cent decline between April and June.

But Alice Hain, personal finance analyst at investment platform Bestinvest, said: "With the two-year freeze in energy bills saving households £1,000 a year, the UK is expected to suffer a much milder recession than previously forecast."

Attention is starting to focus on what Kwasi Kwarteng will announce in the emergency "budget" pencilled in for late next week.

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