According to the Office of National Statistics, the UK economy increased by just 0.2% in July.

The economic improvement fails to excite economists, who warn that next week’s funeral of Queen Elizabeth could also affect September’s GDP.

The data fell short of the 0.4% increase predicted by experts and followed a 0.6% decline in June.

Despite being 1.1% above pre-coronavirus levels, the GDP for the three months leading up to July was flat compared to the preceding three months.

The primary contributor to the July figure was the 0.4% increase in the services sector, which followed a 0.5% decline between May and June.

Yael Selfin, the chief economist at KPMG UK, stated, “The meager 0.2% rebound in July was driven by the weak GDP in June, which was partially attributable to the loss of working days due to the Jubilee holiday.

“More worrisome is the fact that July’s GDP remained below the level recorded in May, indicating an overall contraction throughout the first two months of summer.

This contributes to a pessimistic picture of the British economy, which could enter another mild recession by the end of the year due to the continuous compression of household income and the mounting cost burden for businesses.

While the approximately £170 billion in fiscal measures announced last week may be adequate to prevent a deeper economic downturn, they will be partially offset by the Bank of England’s tougher monetary policy aimed at tackling rising inflation levels.

It comes one month after the Bank of England predicted that the United Kingdom would enter a recession at the end of this year that would run until the beginning of 2024, primarily owing to the rising cost of living.

Last week, Prime Minister Liz Truss unveiled a large handout to help consumers cope with fast-rising energy bills, which should somewhat reduce inflation but will cost at least £100 billion.

Queen’s funeral may add 0.2% to September’s GDP.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, reported that July’s GDP was only 0.04 percent higher than April’s, which was the final month unaffected by the Queen’s Jubilee.

He noted that the Queen’s funeral could result in a 0.2% decrease in September’s GDP.

The extended public holiday for the Queen’s burial on September 19 has the potential to be more detrimental to the economy than the extra day off for the Jubilee in June, given the hospitality and tourism sectors are unlikely to gain and many businesses will still be closed.

Simultaneously, Mr. Tombs predicted that households’ real disposable incomes would rebound as a result of the government’s decision to control energy prices, preserve previously announced grants, and reverse April’s national insurance hike.

“An excessive tightening of monetary policy is currently the greatest threat to the economic outlook, but we believe that the (Bank of England’s monetary policy committee) will soon come to its senses, as labor market slack increases and the rate of core inflation slows, as suggested by leading indicators.

In light of this, we continue to believe that a recession will be narrowly averted in the coming quarters.

PwC predicts the first technical recession since the termination of lockdown regulations.

PwC economist Jake Finney said that the United Kingdom would enter a technical recession for the first time since the end of economic restrictions, predicting that the GDP will decline by 0.1% in the third quarter of this year.

Regarding July’s growth, he stated, “Looking below the headlines, it is evident that the success of the services sector drove this good growth rate.”

In July, production, and construction, two of the economy’s other major growth drivers, decreased.