THE UK economy grew by 0.2% in July, which is slower than expected, following a sharp drop in the previous month. 

The Office for National Statistics (ONS) said the services sector was the biggest contributor to growth. 

Although the economy expanded in July, the growth was slower than the 0.4% growth expected by economists. 

Gross Domestic Product (GDP) fell in June due to the extra bank holiday for the Queen’s Jubilee. 

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GDP – which measures all the goods and services produced in the UK – fell by 0.6% in June because of there being two fewer working days. 

Analysts have also said that the bank holiday for Queen Elizabeth’s state funeral on September 19, as well as the 10 days of national mourning, could have an impact on economic growth and push the UK into recession sooner than expected. 

Last month, the Bank of England said it expected the UK to fall into recession at the end of this year. 

This occurs when there are two consecutive quarters of shrinking output.

Between April and June, the economy contracted by 0.1% compared with the previous quarter.

Chief economist at KPMG UK Yael Selfin said: “The feeble 0.2% bounce back in July was driven by weak GDP in June due in part to the loss of working days from the Jubilee long weekend. 

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“More concerning, July’s GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer. 

“This ties into a downbeat outlook for the UK economy which could see another shallow recession from the end of this year, driven by the ongoing squeeze on households’ income and a rising cost burden for businesses.

“While nearly £170 billion worth of fiscal measures announced last week may be sufficient to avoid a deeper economic slump, these will be partly offset by tighter Bank of England monetary policy focussed on combating high levels of inflation.”