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British economy reverses early summer gains as GDP slips 0.5%

Britain's economy contracted by 0.5% in July as output from services, production and construction, which had been growing, turned negative, according to official estimates released Wednesday. File Photo by Jeff Kowalsky/UPI
Britain's economy contracted by 0.5% in July as output from services, production and construction, which had been growing, turned negative, according to official estimates released Wednesday. File Photo by Jeff Kowalsky/UPI

Sept. 13 (UPI) -- Britain's economy went into reverse in July shrinking by 0.5% as output from services, production and construction, which had been growing, turned negative dragging GDP into the red, the country's main statistical agency said Wednesday.

The fall across all three main drivers of Britain's services-heavy economy following a 0.5% growth spurt in June was driven by industrial action by NHS staff and teachers and wet weather keeping consumers away from shopping malls and hospitality, the latest estimates from the Office for National Statistics show.

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Services output contracted by 0.5%, compared with 0.2% growth in June, output in consumer-facing services was flat, down from 0.5% growth in June and production output slumped 0.7% after expanding by 1.8% the previous month.

The poor July weather following on from a warm, sunny June, saw construction back up from a 1.6% rise to contract by 0.5% due solely to a decrease in repair and maintenance, with new work showing a slight rise of 0.1%, the ONS said.

"Manufacturing also fell back following its rebound from the effect of May's extra Bank Holiday," said ONS Economic Statistics Director Darren Morgan.

Briton's had an extra public holiday in May for the coronation of King Charles III, bringing the number of days lost to the economy in the month due to holidays to three.

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In all, five of the nine economic sectors the agency measures shrank in July, compared with June.

But measured by the longer-range quarterly reading the economy is continuing to expand, albeit weakly, with strong production output helping the GDP grow 0.2% in the May to July period.

However, Morgan said the broader picture looked more positive than the figures would suggest with the economy growing across all three key economic drivers -- services, production and construction -- in the last three months.

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