- UK GDP grew 0.6% in the second quarter of the year
- Growth stalled in June as election uncertainty and bad weather impacted businesses
- Household consumption rose as inflation fell and wage rises put more money in people’s pockets
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“The UK economy has kept its foot on the accelerator pedal as it continues to put last year’s recession firmly in the rear-view mirror.
“At 0.6%, growth in the second quarter is higher than that being enjoyed in the rest of the G7 with the exception of the USA, although Germany and Japan are yet to update their figures.
“Household consumption was up as people have got a few more pennies in their pockets thanks to falling inflation and strong wage growth. That extra cash sloshing around has provided the fuel for the kind of growth that’s been lacking for the past couple of years when the economy seemed to flatline following its post-Covid recovery.
“But it’s not all good news and June looked distinctly limp as election uncertainty put off some spending decisions by business, whilst the impact of strike action continued to exert pressure on the economy. The weather also played a part with retail sales suffering as summer seemed to go missing for much of the month.
“This kind of economic data never used to be dinner table conversation, but that’s changed over the past couple of years and households are now more aware of the importance of achieving and maintaining decent growth levels. The new Labour government put growth at the heart of its election campaign, although this growth didn’t happen on their watch and the kind of post cost crunch boost we’ve been enjoying can only come once.
“The ONS suggests that some declines in manufacturing over the first part of the year have come from businesses re-tooling and reimagining their lines for a different age, particularly in the auto sector. And looking at June’s figures there was a marked uptick in output which bodes well for the second half of the year.
“There’s also been a lot of focus on construction with national housebuilding targets to be reintroduced in a bid to deal with the housing shortage, especially for those seeking affordable homes.
“The interest rate cut from the Bank of England which came in August has already seen competition in the mortgage market hotting up and confidence building. But there are no easy answers or quick solutions to ensure that growth maintains its current trajectory and doesn’t get bogged back down in the same old sticky problems.”
