The economy slowed in June as inflation and an uncertain outlook fuel recession fears.

The Office for National Statistics (ONS) released its monthly estimate of GDP growth today (12 August).

It shows the economy contracted by 0.6% in June with services being the main driver in the drop as they fell by 0.5% over the month.

According to the ONS, a decline in human health activities was the largest contributor.

Test and trace activity reduced further and vaccinations continued to tail off, following the spring booster campaign.

Production fell by 0.9% in June 2022, following an increase of 1.3% in May.

This was mainly because of a fall of 1.6% in manufacturing following strong growth in May 2022.

Construction also fell by 1.4% in June 2022, following seven consecutive months of growth.

Commentators reacted to the news with warnings the situation could worsen.

Mazars chief economist George Lagarias says: “British economic output continues to slow down as pressures pile on consumers. With inflation over 8%, many UK households have been in ‘recession’ long before the official numbers can confirm it. Higher rates, higher prices and more taxes are suppressing consumption and sentiment.

“Yet, we are still far from the point where central banks would stop aggressive tightening. We expect economic pressures to worsen in the near future, at least until prices begin to materially de-escalate and the BoE feels comfortable dialling back interest rates.”

And Phoebus Software chief sales and marketing officer Richard Pike comments: “We will undoubtedly see an influx of inbound communication into various agencies such as Citizens Advice by people not just financially struggling today, but perhaps looking at how they will cope in the future. Could it be the right time for lenders and banks to upskill certain staff to be able to give more generic, non-regulated advice on household budgeting and understanding in detail the areas of support that are available today or measures that are coming down the line to be able to engage with customers that are concerned?

“This sort of proactive behaviour will certainly give early sight of potentially problem cases, but as importantly, will build borrower loyalty and be seen very positively from an ESG perspective, an area that is rapidly becoming more important in our sector.”