Agencies
Britain’s economy expanded 0.6% in the second quarter, a slight slowdown compared with the first three months of the year, official data showed on Thursday, building to prospects of recovery after a shallow recession in the second half of the last year.
The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.6% between April and June, in line with economist predictions.
Gross domestic product had expanded by 0.7% in the first quarter of 2024, the ONS said in a statement.
“These figures confirm that the U.K.’s recovery from recession picked up steam in the second quarter, despite strike action and wet weather causing activity to flatline in June,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.
However, he said he expected growth would slow in the second half of 2024 due to interest rates which remain near a 16-year high, despite this month’s Bank of England (BoE) cut, and also persistent supply constraints and slower wage growth.
In June, there was no economic growth recorded for the month as weakness in services was offset by improvements in the manufacturing sector.
It came after no growth was recorded in April due to an impact from wet weather, and then 0.4% growth in May as the economy recovered.
ONS director of economic statistics Liz McKeown said, “The U.K. economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.”
“Growth across the three months was led by the service sector, where scientific research, the IT industry and legal services all did well.”
”In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing.”
The latest data covers the period just before Britain’s general election in early July, which resulted in the center-left Labour Party winning power on a promise to grow the country’s economy by a sizable amount.
“The new government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a 22 billion pounds ($28 billion) black hole in the public finances,” Finance Minister Rachel Reeves said Thursday in reaction to the latest gross domestic product figures.
“That is why we have made economic growth our national mission and we are taking the tough decisions now to fix the foundations, so we can rebuild Britain and make every part of the country better off.” Prime Minister Keir Starmer said he wanted the economy to achieve annual growth of 2.5% when campaigning in the run-up to July 4’s election – a rate that Britain has not regularly reached since before the 2008 financial crisis.
Britain’s economy has grown slowly since the COVID-19 pandemic. Only Germany, which was also hit hard by surging energy costs after Russia’s invasion of Ukraine, has done noticeably worse among the world’s largest advanced economies.
At the start of the month, the Bank of England raised its annual growth forecast for 2024 to 1.25% from 0.5% due to a stronger-than-expected start to the year and an expectation of 0.7% quarter-on-quarter growth in the three months to June.
But it was less upbeat about the outlook for the remainder of 2024, seeing growth slow to 0.4% in the third quarter and 0.2% in the final three months of the year – which it views as closer to the economy’s underlying growth rate.Thursday’s figures showed output per head in the second quarter of 2024 was 0.1% lower than a year earlier.
Growth in output per hour worked has slowed in most advanced economies since the late 2000s – limiting increases in living standards – and Britain’s long-standing domestic headwinds from low business investment were exacerbated by the public’s 2016 vote to leave the European Union.
