Britain’s economy shrank last month, official figures show, as businesses and households grappled with the impact of 14 consecutive interest rate rises.

Gross domestic product (GDP) shrank 0.5pc in July - the quickest pace in seven months - according to the Office for National Statistics (ONS).

Economists had expected a contraction of 0.2pc ahead of the Bank of England’s decision next week on whether to raise interest rates to 5.5pc.

The economy had grown by 0.5pc in May when it rebounded following the extra bank holiday for the Coronation.

It comes a fortnight after the ONS admitted its previous assumptions about the UK economy were too gloomy after revising figures to add nearly 2pc to the size of the economy as of the end of 2021.

Meanwhile, in July, the IMF said it expects the UK economy to grow by 0.4pc this year, putting it ahead of Germany.

This week, the European Commission, the EU’s executive arm, conceded that the UK had performed better than expected in its updated summer forecasts

The UK economy grew slightly in the second quarter of the year, expanding 0.2pc in the three months to June, having grown 0.1pc in the first three months to 2023.

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