U.K. economy contracts in the second quarter as cost-of-living crisis bites

The U.K. economy contracted in the second quarter of 2022.

The GDP fell by less than anticipated in the second quarter of the year, according to official figures.

The GDP expanded in the first quarter.

The Bank of England said last week that it expects the U.K. economy to go into a recession in the fourth quarter. Inflation is expected to peak in October.

GDP fell 0.6% in June, less than the consensus forecast but still down from a revised expansion in May.

According to Hussain Mehdi, macro and investment strategist at HSBC Asset Management, the U.K. is facing challenges from a severe real income squeeze.

It will be difficult to dodge a recession because of the upside risks to energy prices.

HSBC backs large-cap U.K. equities because of their exposure to commodity, value and defensive names

The contraction was largely driven by a fall in services output, with the biggest drag coming from health and social work activities.

The fall in household consumption was offset by a positive contribution from net trade.

The news story will be updated soon.