Revised official figures indicate that economic growth in the UK was weaker than previously estimated during the spring. The Office for National Statistics (ONS) reported that gross domestic product (GDP) increased by 0.5% between April and June, down from the initial estimate of 0.6%. The growth was primarily fuelled by the services sector, while the manufacturing and construction industries had a dampening effect on the overall figure. This data suggests that the UK economy continued its recovery from recession in late 2023, albeit at a slightly slower pace than initially believed.
Notably, a technical recession, characterised by two consecutive quarters of negative growth, was averted. Unrevised figures show that GDP expanded by 0.7% in the first quarter of the year, marking the end of a shallow recessionary period. Furthermore, the ONS revised its estimate for the overall GDP growth in 2023 from 0.1% to 0.3%. This shift was attributed to stronger income data, including employee salaries and business profits, contributing to an improved economic outlook.
Liz McKeown, the ONS’s director of economic statistics, highlighted that the updated figures incorporated new survey data and information on industry sizes, resulting in a relatively unchanged growth trend over the past 18 months. The data also revealed an increase in household savings, with the household saving ratio rising to an estimated 10% in the latest quarter. However, recent data suggests that the economy has stagnated, with no growth recorded in both June and July.
Chancellor Rachel Reeves acknowledged the significant challenges ahead, noting that despite recent positive growth, it does not compensate for years of economic stagnation. Reeves emphasised that meaningful change will require sustained efforts over time, indicating a realistic approach to addressing economic recovery. As the UK contemplates its economic trajectory, ongoing monitoring and strategic interventions will be paramount in navigating the evolving landscape.