The UK economy's modest gains from the first half of the year are expected to be reversed, primarily due to a downturn in the construction industry, according to economists. A Bloomberg-tracked poll of economists suggests that GDP contracted by 0.1 per cent in June, partially unwinding previous growth.
Analysts at Pantheon Macroeconomics stated that a "sharp fall in construction activity" is anticipated to hinder growth, while output in services and production is also expected to "stagnate". Official figures for June are due to be released on Thursday.
Construction output is projected to have decreased by as much as 0.7 per cent in June alone. While accommodation and food services are also expected to weigh on the economy, higher spending linked to the World Cup could potentially surprise economists positively.
Despite these concerns, the UK economy could still exceed earlier forecasts. In the first three months of the year, the economy grew by 0.6 per cent, surpassing analysts' expectations. Economists now believe growth could reach 0.4 per cent for the second half of the year, up from earlier projections of around 0.2 per cent.
Sanjay Raja of Deutsche Bank noted that household consumption is expected to provide a "modest boost" to growth in the second quarter, driven by better-than-expected retail sales. Sunny weather and England's World Cup participation reportedly helped maintain momentum, although business investment "likely remained subdued."