Economists have warned a recession could be on the horizon in the UK, as consumer spending continues to fall and threatens to cripple growth.
The latest figures from the Office for National Statistics (ONS) released yesterday showed consumption had grown by only 0.1% in the three months to June, the weakest quarter since the end of 2014.
Economists said the data suggests a squeeze on household finances and spending as inflation outstrips wages, according to The Times.
Consumer spending accounts for almost two-thirds of economic output, so a collapse could be devastating for the UK, pundits have warned.
This has had a further knock-on effect on shops, as the contraction in retail sales in the year to August has led to plans to lay staff off.
In its monthly distributive trades survey, the Confederation of British Industry head of economic intelligence Anna Leach said: "Retail sales have cooled as higher inflation continues to squeeze consumers' pockets . . . Deteriorating sentiment regarding the business situation has combined with falling headcount among retailers."
Meanwhile, the ONS's initial estimate of 0.3% GDP growth for the second quarter remains unchanged.
Barclays forecasts GDP growth of only 0.2% for Q3 and Q4, while Fathom Consulting said there was a "greater-than-evens" chance of a technical recession over the next year.
The EY Item Club added "weakened consumer spending will continue to hold back growth in the third quarter," while Moody's investors' service said "a prolonged moderation in consumer growth and a stagnating housing market are among the key concerns for the economic outlook".
A slowdown in consumption and business investment has been expected following the fall in sterling and heightened uncertainty since last year's Brexit vote.
ONS head of GDP Darren Morgan said: "Growth has slowed markedly in the first half of the year with relatively robust services growth, partly thanks to a booming film industry, offset by weak performances from manufacturing and construction in the second quarter.
"Household spending grew weakly, with the lower-value pound hitting household budgets, while business investment showed no growth at all."
The ONS figures also confirmed Britain was the slowest growing G7 advanced economy in the quarter, followed by Italy which grew by 0.4% during the same period.
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