UK economy grows 0.6% in second quarter

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The UK economy grew 0.6 per cent in the second quarter, in a marginal slowdown from the robust growth of the previous three months.

The quarter-on-quarter change in the GDP figure from the Office for National Statistics on Thursday compared with 0.7 per cent growth in the first three months of the year and was in line with economists’ expectations.

Monthly GDP growth was zero in June following a 0.4 per cent expansion in May, the ONS said. The figure was in line with analysts’ expectations.

Prime Minister Keir Starmer has placed growth at the centre of his economic agenda since taking office last month, promising to “take the brakes off Britain”.

The UK economy entered a technical recession at the end of last year after being hit by high inflation and borrowing costs. However, it returned to growth this year, helped by stronger household spending as price pressures and mortgage rates declined.

In August, the Bank of England upgraded its GDP growth forecast for this year to 1.25 per cent from just 0.5 per cent owing to stronger-than-expected activity in the first half of the year. It expects quarterly GDP growth to fall back to 0.4 per cent and 0.2 per cent in the third and fourth quarters, respectively.

The UK’s GDP figure for the three months to June compares with a 0.3 per cent expansion in the Eurozone and 0.7 per cent growth in the US.

Sterling nudged higher following the ONS release. The pound climbed 0.2 per cent against the US dollar to $1.285. 

The yield on the interest rate-sensitive two-year gilt dipped 0.1 percentage points to 3.54 per cent. 

Liz McKeown, ONS director of economic statistics, said: “The UK 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,” she added.  

Responding to the GDP data, chancellor Rachel Reeves said the government was “under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth”.

“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,” she added.