UK GDP in the second quarter

The UK National Statistics Office announced on Thursday that the UK economy grew by 0.6% in the second quarter of this year, continuing the UK economy’s cautious rebound from recession.

The data was in line with economists’ expectations in a Reuters poll and showed the economy grew 0.7% in the first quarter.

Economic growth was flat in June, in line with a Reuters poll, with activity in the UK’s key services sector falling 0.1%. Construction and manufacturing output rose 0.5% and 0.8% respectively in the month.

Britain’s economy is emerging from a shallow recession after posting small but steady growth in almost every month so far this year. Gross domestic product was also flat in April as wet weather dampened retail sales and construction output.

On an annualized basis, the economy grew 0.9% in the second quarter, above expectations for a 0.8% gain.

“These data confirm that the UK economy’s recovery from recession gained momentum in the second quarter, despite strikes and rainy weather stalling economic activity in June,” Suren Thiru, head of economics at the Institute of Chartered Accountants in England and Wales, said in a note.

Thiru continued: “The UK’s strong second quarter performance is more attributable to temporary momentum from the recent sharp fall in inflation and a boost to consumer spending from events such as Euro 2024 than to a significant improvement in the UK’s underlying growth trajectory.”

Thiru added that the pace of economic growth was unlikely to continue into the second half of the year due to slowing wage growth, high interest rates and supply challenges.

UK inflation rises to 2.2% in JulyData from the Office for National Statistics on Wednesday showed inflation was slightly below consensus expectations at 2.3%. The headline figure had been within the Bank of England’s 2% target rate for the previous two months, prompting the central bank to decide Cut interest rates by 25 basis points In early August.

The data for July is Analysts say Although services inflation remains stubborn, it still supports the continuation of monetary easing for the rest of the year.

Between April and June this year, wage growth in the UK excluding bonuses fell to its lowest level in two years, but remained at a relatively high level of 5.4%.

Richard Carter, head of fixed rate research at Quilter Cheviot, said lower interest rates in the coming months would “help stimulate economic growth and make borrowing more affordable for households and businesses”, but noted that the impact would take time to be felt.

The pound edged higher following the release of the GDP data on Thursday, rising 0.1% against the dollar and 0.2% against the euro at 7:35 a.m. London time.

include International Monetary FundInvestment Bank Goldman Sachs and Bank of England Global growth forecasts for the UK have been revised upwards in recent months, with the International Monetary Fund now predicting growth of 0.7% this year, up from 0.5% previously.

Factors cited included falling inflation and reforms to planning and business rules planned by the new Labour government, which took office in July. Prime Minister Keir Starmer and Finance Minister Rachel Reeves have repeatedly said boosting economic growth will be a cornerstone of their policymaking and have set a target for Britain to have the fastest per capita GDP growth among the Group of Seven nations.

“After more than a decade of low economic growth and a £22 billion black hole in the public finances, the new government has no illusions about the scale of the challenge we face,” Reeves said in a statement on Thursday.

Labor will present its first budget on October 30, which analysts say will provide greater clarity on the government’s fiscal strategy and planned changes to taxation and public spending.

Because of this, “we are unlikely to see a significant acceleration in GDP growth in the short term,” said Richard Carter of Quilter Cheviot.

He added: “For now, the economy is expected to continue on a relatively modest growth trajectory, supported by wage growth still above inflation levels and the recent easing of monetary policy.”