Yahoo Finance UK economy grows 0.2% in second quarter, avoiding recession
The UK's economy grew 0.2% in the second quarter, with gross domestic product (GDP) also growing 0.5% in June, according to the latest figures from the Office for National Statistics.
This narrowly avoided a second month of declining growth and outstripped economists expectations.
The services sector grew by 0.1% on the quarter, driven by increases in information and communication, accommodation and food service activities, and human health and social work activities; elsewhere, the production sector grew by 0.7%, with 1.6% growth in manufacturing.
“The economy bounced back from the effects of May’s extra bank holiday to record strong growth in June," said ONS director of economic statistics Darren Morgan. "Manufacturing saw a particularly strong month with both cars and the often-erratic pharmaceutical industry seeing particularly buoyant growth."
The UK is the only major advanced economy yet to have met pre-COVID levels of late-2019, the data showed. It is now 0.2% below that level as of the end of June. That's compared with 0.2% above for Germany, 1.7% for France, 2.2% for Italy and 6.2% for the United States.
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Looking at the broader picture, gross domestic product (GDP) showed no growth in the three months to May.
Production output has bounced back, having fallen by 0.6% in May after a fall of 0.2% in April. This was revised up from a fall of 0.3% in the previous publication. This sector was the main contributor to the fall in monthly GDP in May.
“The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy," said chancellor Jeremy Hunt.
“The Bank of England are now forecasting that we will avoid recession, and if we stick to our plan to help people into work and boost business investment, the IMF have said over the longer-term we will grow faster than Germany, France and Italy.”
Various long-term forecasts from the likes of the IMF and KPMG have looked to modest long-term growth for the UK. Last month KPMG said it expects growth to remain weak, with real GDP at just 0.3% in 2023, rising to 1.1% in 2024. "The risks are skewed to the downside," they added.
FTSE 100 futures were pointing to a lower open on Friday in London.
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