The BCC head of research David Bharier said the estimated rise in monthly GDP for July 2022 by 0.2 per cent showed that growth continues to fluctuate considerably on a month-by-month basis.
“The main driver of growth is the services sector following a fall in the previous month. However, the production and construction sectors have both seen a second consecutive fall in growth,” he said.
“The UK economy faces serious immediate and longer-term structural issues which could lead to quarterly recession by the end of 2022, and anaemic yearly growth after that.
“BCC’s research shows that business confidence is trending downwards, with inflation wiping out turnover and profitability for many firms and a record proportion facing recruitment difficulties.
“Last week’s announcement on support for firms’ energy bills will have provided some reassurance to business and should dampen one of the key sources of inflation, but further details of the scheme are needed to restore long-term confidence.
“The Bank of England face a delicate balancing act on monetary policy and while inflation is the dominant issue, further rate raises could compound the economy’s move towards recession.
“Crucially, while the war in Ukraine continues, we are unlikely to see a stabilisation in gas prices, and the economic outlook will remain challenging.”
Ironically, it was an increase in trade of fuels, particularly oil and gas, which gave the GDP the boost to move into positive territory.
William Bain, head of trade policy at the BCC, said the UK is seeing trade in fuels, particularly oil and gas, at elevated levels. Vehicle and other mechanical engineering exports did well too.
Overall goods imports from the EU decreased by 0.3 per cent (lower car imports from Germany and Spain were factors here) while goods exports to the EU rose by 7.9 per cent. Fuel exports to the EU rose by £0.8 billion in July alone, largely down to increased oil and gas exports to the Netherlands and oil exports to France.
Non-EU goods imports fell by 1.5 per cent in July 2022, offset by higher levels of gas imports from Norway and refined oil from Kuwait. Overall goods imports were 0.9 per cent lower in July 2022 compared with the previous month.
Total goods exports in July 2022 rose by 6.7 per cent, with a 7.9 per cent rise in exports to the EU accompanied by a 5.4 per cent rise in goods exports to the rest of the world. Exports of ships to Gibraltar, mechanical machinery items to China, and vehicles to the US and China were at the centre of the rise in rest-of-the-world goods exports in July.
The overall trade deficit (ex-inflation) narrowed in the three months to July 2022 by £2 billion, coming in at £20.8 billion.
