The UK economy stagnated in the three months to July, when the cost of living crisis hit household finances and business activities.
UK production over the period was on par with the previous three months, according to data from the Office for National Statistics released Monday. Economists polled by Reuters had expected 0.1 percent growth.
The pace of growth has slowed since the beginning of the year as rising costs hit businesses and consumers. Inflation rose to a 40-year high in July, hitting real incomes and profits.
Some economists believe the freeze announced last week by the new prime minister on average annual household energy bills of £2,500 over the next two years will prevent a severe economic downturn.
“A recession in the coming quarters no longer seems likely, following the energy price announcement by the new prime minister,” said Samuel Tombs, chief economist in the UK at Pantheon Macroeconomics.
Production grew 0.2 percent between June and July, largely due to the loss of two business days in June in connection with the anniversary celebrations, as the economy contracted.
The services sector grew 0.4 percent in July, recovered from June and propelled gross domestic product growth. Production fell 0.3 percent after dropping 0.9 percent in June, while construction also saw two consecutive sharp contractions.