Spread of cases knocks wind out of UK economy

Britain's economy unexpectedly slowed to a crawl in July.

A rise in cases of the Delta variant after restrictions were eased kept many workers at home self-isolating.

Economic output rose just 0.1% in July, the smallest monthly increase since January.

Economists polled by Reuters had mostly expected month-on-month growth of 0.6%.

Finance minister Rishi Sunak said he was confident that the economy would continue to recover.

But the slowdown in growth may bolster the case made by Bank of England officials who think it is premature to talk about withdrawing stimulus, despite growing inflation pressure.

Earlier this week, BoE Governor Andrew Bailey said he saw a leveling-off in the recovery taking place.

With labour shortages, global supply chain problems and Brexit disruption stunting the recovery.

The dominant services sector was flat in July, driven mostly by a drop in the retail sector.

But early signs of how Britain's economy fared in August suggest that consumers are back to spending.

Data has showed spending on payment cards returned to 99% of its pre-crisis level in early September.

It remains to be seen though how this week's announcement of tax hikes, to fund health and social care, will affect the economy.

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