UK economy grows 0.5% in June easing recession fears – what it means for your money
THE UK economy grew by 0.5% in June, the latest figures from the Office for National Statistics (ONS) show.
It came after a 0.1% decline in May which was largely driven by the extra bank holiday weekend for the King's Coronation.
The first quarterly estimate of UK real gross domestic product (GDP) also show that the economy increased by 0.2% in the second quarter between April and June - up from 0.1% in the previous quarter.
The services sector grew by 0.1% on the quarter, driven by increases in information and communication, accommodation and food service activities, and human health and social work activities.
Elsewhere, the production sector grew by 0.7%, with 1.6% growth in manufacturing.
GDP measures the value of goods and services produced in the UK.
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It also estimates the size of and growth in the economy.
June's growth was better than experts expected easing fears that the country could fall in to recession.
The National Institute of Economic and Social Research recently warned that the UK is still at 60% risk of falling into recession next year.
Generally speaking, if the GDP has fallen over two quarters (or six months), a country is said to be in recession.
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Experts say that a continued rise in unemployment and increase in company insolvancies puts the economy at greater risk of negative growth.
Alice Haine, personal finance analyst at Bestinvest said: "The BoE may be expecting the UK to avoid a recession this year, and potentially bypass a downturn altogether, but growth is likely to be limited with unemployment on track to rise over the next few years."
Recessions are bad news, because they usually lead to unemployment and wage stagnation.
This in turn means the government gets less tax, which could mean cuts to services and benefits, or that rates go up.
But responding to today's statistics, ONS director of economic statistics Darren Morgan said: "The economy bounced back from the effects of May’s extra bank holiday to record strong growth in June.
"Manufacturing saw a particularly strong month with both cars and the often-erratic pharmaceutical industry seeing particularly buoyant growth.
"Services also had a strong month with publishing and car sales and legal services all doing well, though this was partially offset by falls in health, which was hit by further strike action.
"Construction also grew strongly, as did pubs and restaurants, with both aided by the hot weather."
However, forecasts from the Bank of England see growth remaining sluggish for years to come.
Chancellor of the Exchequer, Jeremy Hunt said: "The actions we're taking to fight inflation are starting to take effect, which means we're laying the strong foundations needed to grow the economy."
What does it mean for my money?
A healthy economy is one that is growing and not in recession so the latest figures should be good news for consumers.
A country is in recession if there are two consecutive quarters of Gross Domestic Product (GDP) falling.
The year is split into four three-month quarters.
The economy remained unchanged in the three months to March, which means a recession was avoided.
Recessions are bad news because it usually means jobs will be lost and wages will stall.
It can cause businesses to go into administration or bust too.
This, in turn, means the government gets less tax, which could mean cuts to public services and benefits such as Universal Credit. Tax rates might go up too.
The UK last went into recession in 2020 after the coronavirus pandemic hit, shutting down large parts of the economy.
How to protect your finances
If you're worried about your finances, there are steps you can take to try and keep your cash safe.
Having an emergency savings pot is helpful in times of high inflation, to help cover any outgoings that might have increased unexpectedly.
You might consider asking for a pay rise at work, but there are no guarantees your company is in a position to offer one.
Be sure to make savings where you can - shop around for better deals on your car and home insurance, as well as broadband and mobile phone.
Save money by going to a cheaper supermarket, shopping for own-brand rather than premium products, and looking out for yellow-sticker bargains.
Make a budget and check your bank statements for any forgotten subscriptions you might be wasting money on.
Making extra cash in your spare time can help too, picking up a side hustle or selling your old clothes could give you a boost.
A woman recently told The Sun her £7,000 a month side hustle lets her make cash from her sofa - but some thinking its a boring chore.
From being paid to watch movies to recycling old till receipts here are 20 easy side hustles you can do at home and make money.
When money is tight, it can be tempting to ignore debts - but this will only make your financial situation worse.
Stay on top of what you owe and always repay priority debts.
There are also plenty of organisations where you can seek debt advice for free.
These include:
- National Debtline - 0808 808 4000
- Step Change - 0800 138 1111
- Citizens Advice - 0808 800 9060
You should also check what benefits you are eligible for.
Entitledto's free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
If you don't want to register, consumer group MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto's data that let you save your results without logging in.
There is also emergency funding available for struggling households, which is dished out by local councils.
The Household Support Fund is designed to help those in most need with payments towards the rising cost of food, energy, and water bills.
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Help available varies, but you could get free cash, food vouchers, and help for bills like rent and energy.
You could also get similar help from your council under the welfare assistance scheme.