“As the Bank of England accelerates its interest rate increases to combat inflation, households and businesses are beginning to feel the effects of tighter monetary policy, with more yet to come.
“Business investment is likely to weaken further in the near term, as borrowing costs increase and policy uncertainty remains high ahead of the elections.
“Overall consumption growth could remain sluggish until well into next year as households face multiple economic headwinds. While stronger pay growth and falling inflation could see real incomes start growing again later this year, the impact of higher mortgage costs and rising rents could weigh on household spending. Falling house prices may further dent spending.
“The UK economy contracted by 0.1 per cent in May. The three Bank holidays in the month had an uneven impact across sectors, with services seeing no change in output on the previous month, while manufacturing and construction were both negatively impacted.”
