Economists from Investec and Pantheon Macroeconomics expect the UK economy to have shrunk by 0.1% in July due to weak retail sales and increased energy costs. This would follow a 0.3% growth in June, which was boosted by the World Cup and hot weather. According to Investec analysts, soft retail sales for July are partly to blame, while Pantheon Macroeconomics' Robert Wood points to declines in large parts of the services sector as likely contributors to the slowdown. The UK economy is expected to grow 0.2% in the third quarter, down from 0.4% in the second quarter.
Written by the local model on 2026-09-06,
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Story summary
The UK economy is expected to have shrunk slightly in July despite a boost from the World Cup. According to economists at Investec and Pantheon Macroeconomics, the Office for National Statistics will likely report that the economy's growth rate fell by 0.1% for the month when it releases its latest data on September 11. This would be a correction from June, when the economy grew 0.3% due to strong sales in the hospitality and leisure sectors. However, economists warn that this boost was likely brought forward from July, and weaker retail sales and increased energy costs are now putting pressure on households. Despite this, the UK economy had a strong start to the year, growing by 1% in the first half of the year compared to the rest of the G7 countries. The predicted dip in July's growth rate may signal a slowdown for the economy in the third quarter.
Written for “UK Economic Downturn” on 2026-09-07,
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UK economy expected to have dipped in July despite World Cup boost
The UK economy is likely to have shrunk slightly in July due to pressure from weak retail sales and increased energy costs for households, economists have warned.
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economists → expect → households
Experts at Investec and Pantheon Macroeconomics have predicted that the Office for National Statistics will reveal UK GDP fell by 0.1% for the month when it releases the latest growth data on September 11.
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it → predict → September
In June, the UK economy grew 0.3% as hospitality and leisure firms received a boost from football fever and the prolonged hot weather.
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firms → grow → fever
It meant the economy expanded by 0.4% during the second quarter of the year.
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economy → mean → year
However, economists have predicted that there is now likely to be a correction as stronger-than-expected June activity may have brought forward spending from July.
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activity → predict → July
Investec analysts said: “After a positive first half of the year, where the UK economy actually outperformed the rest of the G7, growing by 1%, we expect the third quarter will begin with a weaker performance.
“
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quarter → say → 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% uplift to the energy price cap would have had a dampening effect.”
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rise → see → effect
Pantheon Macroeconomics’ Robert Wood also pointed to a 0.1% decline for July and predicted that growth in the third quarter will slow to 0.2%.
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growth → point → %
He said large parts of the services sector are likely to have witnessed declines and drag on the overall performance of the economy.
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parts → say → economy
Retail and wholesale activity is likely to have slid by 0.3% for the month but this will be more than offset “a surge in accommodation and food services output in July” amid a boost from the World Cup and hot weather.
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this → slide → Cup
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Thomas Pugh, chief economist at RSM UK, added: “Services are likely to have been a tale of two consumers.
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Services → read → consumers
England’s World Cup run should have delivered a strong month for pubs, restaurants and hotels, but a 0.5% fall in retail sales suggests households changed where they spent, rather than opening their wallets wider, spending more money over the bar, but less at the tills.”
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they → deliver → tills
