Economists have warned that Britain's economic growth has suffered because people have been enjoying beers during the World Cup and heatwaves instead of spending in shops.
Economists are expecting gross domestic product (GDP) - a measure of how much the UK economy produces - to show no growth in July when the Office for National Statistics (ONS) releases its next dataset on Friday. They believe punters swapped spending in shops for drinking in pubs amid the heatwaves and England and Scotland's appearances at the World Cup.
Consumers shifting spending
Elliott Jordan-Doak, an analyst for Pantheon Macroeconomics, said any decline was “more likely the result of consumers shifting spending to drinking in the pub than a sign of weakening in consumer spending growth”.
The figures would suggest households have changed spending habits and have not cut back even as energy bills are set to rise again. The statistics will come as a blow to new Prime Minister Andy Burnham, who moved into Downing Street that month.
Chancellor's optimistic view
His Chancellor, John Healey, insisted only a few days ago that there was an “optimistic story” about the UK economy that was “turning a corner”. His comments came after June's GDP numbers suggested the UK economy grew 0.3 percent as hospitality and leisure firms received a boost from football fever and the prolonged hot weather.
However, economists have predicted that activity was muted in July as other parts of the economy lagged, offsetting the continued World Cup and hot weather boost to hospitality. In particular, retail and wholesale activity is predicted to have dipped by 0.3 percent for the month.
Analysts' expectations
Analysts for Investec said: “After a positive first half of the year, where the UK economy actually outperformed the rest of the G7, growing by 1 percent, we expect the third quarter will begin with a weaker performance.
“Some evidence of this has already been seen in soft retail sales for the month, whilst we expect the rise in household utility bills due to the 13 percent uplift to the energy price cap would have had a dampening effect.”
Economists for Deutsche Bank said they were expecting the economy to “slow from its current torrid pace of growth”.
“The real income shock from the Middle East has yet to fully filter through the data,” they said. “One-offs that have buoyed the economy will also likely unwind. And some budget uncertainty could put households and businesses off from spending.”
