Economists are predicting that the UK economy may have slightly shrunk in July, mainly due to weaker retail activity and increased energy costs for households. According to analysts from Investec and Pantheon Macroeconomics, the Office for National Statistics is expected to report a 0.1% drop in monthly GDP when the official figures are released on September 11. This potential decline would mark the start of Andy Burnham’s tenure as Prime Minister, who took office during the second half of July, succeeding Keir Starmer. In June, the UK economy grew by 0.3%, with hospitality and leisure businesses benefiting from a long period of warm weather and excitement around football tournaments. This helped the overall economic growth for the second quarter reach 0.4%. However, forecasters believe that some of the strong activity in June might have pushed forward household spending that was originally planned for July, leading to a possible slowdown in the following month. Analysts at Investec noted that while the UK economy performed well in the first half of the year, growing by 1% and outpacing the rest of the G7, the third quarter is expected to show a weaker performance. Early signs of this have already emerged with softer retail sales in July. Additionally, the recent 13% increase in the energy price cap is expected to have reduced household budgets, further affecting consumer spending. Pantheon Macroeconomics’ Robert Wood also predicted a 0.1% decline in July, suggesting that the overall economic growth for the third quarter will slow to 0.2%. He pointed out that various sectors within the services industry likely experienced downturns, which could drag down the national economy. While retail and wholesale output are expected to have decreased by 0.3%, this decline may be offset by a significant increase in accommodation and food services, fueled by the hot weather and the excitement around the World Cup. Thomas Pugh, chief economist at RSM UK, noted that the services sector might have shown a contrast in consumer behavior. While England’s World Cup performance should have boosted business for pubs, restaurants, and hotels, the 0.5% drop in retail sales suggests that households shifted where they spent money rather than increasing their overall spending. People may have chosen to spend more on food and drinks at restaurants but spent less on retail items.