Britain's economy shrank in the second quarter, official data showed Friday, as the country heads toward recession under a new prime minister.
U.K. gross domestic product (GDP) dropped 0.1% in the April-June period after a rise of 0.8% in the first quarter, the Office for National Statistics (ONS) said in a statement.
The Bank of England (BoE) expects the economy to enter a year-long recession by the end of 2022 as Britons endure a cost-of-living crisis with inflation at its highest level in decades.
"With May's growth revised down a little and June showing a notable fall, overall the economy shrank slightly in the second quarter," said Darren Morgan, ONS director of economic statistics.
"Health was the biggest reason the economy contracted as both the (COVID-19) test and trace and vaccine programs were wound down, while many retailers also had a tough quarter."
Morgan said this was "partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter, partly due to people celebrating the Platinum Jubilee" that marked Queen Elizabeth II's 70 years on the throne.
"It's impossible to tell whether this reflects a smaller than usual hit from the Jubilee, or evidence that the economy has considerable underlying momentum," said Samuel Tombs, an economist from consultancy Pantheon Macroeconomics.
Either way, he said, GDP is likely to rebound in July.
The ONS added that the U.K. economy slumped 0.6% in June.
Britain has lagged behind the United States, Italy and France in the recovery from the COVID-19 pandemic, comparing second-quarter economic output against late 2019. Germany, however, has fared worse.
"The U.K. economy is sliding closer to recession and the worst is yet to come," said Suren Thiru, economics director of the Institute of Chartered Accountants in England and Wales.
Separate ONS data showed Britain's goods trade deficit swelled in June to 22.85 billion pounds as exports to the European Union and the rest of the world cooled.
Following Friday's data, finance minister Nadhim Zahawi said he was "determined to work with the BoE to get inflation under control and grow the economy."
But Prime Minister Boris Johnson will not make "major fiscal interventions" before leaving office next month, his spokesperson said on Monday amid calls for immediate government action to tackle Britain's cost-of-living crisis.
Johnson, back at his desk after a five-day belated honeymoon with wife Carrie in Slovenia last week, has been criticized for being absent as the BoE last week warned of recession.
His trip coincided with Zahawi being away on holiday, as the central bank hiked interest rates by the biggest margin in nearly three decades to stem surging inflation.
Johnson, who last month announced he would step down on Sept. 6 following a slew of scandals, is set to hand power to either Liz Truss or Rishi Sunak after a summer-long Conservative leadership battle.
Foreign Secretary Truss and Sunak -- Zahawi's predecessor as Chancellor of the Exchequer -- have clashed over how to address the crisis.
Truss plans an emergency budget to lower taxes and to review the independent BoE's inflation-fighting mandate.
But Sunak said tax cuts financed with more borrowing would force the bank to increase interest rates, even more, insisting on the need to maintain fiscal rigor and tame the price pressures first.
