Yahoo Finance UK economy grows by 0.2% in second quarter
The UK economy grew 0.2% between April and June compared with the previous quarter, driven by a 1.2% bump for the production sector due to falling input prices, according to new data from the Office for National Statistics (ONS).
These figures met expectations and followed a bump of 0.3% in the first quarter, where growth was revised up from 0.1%.
“Unfortunately this snapshot of economic data is not significant enough to change the overall picture of a flatlining economy," said Jake Finney, economist at PwC.
"Output is only 0.4% higher than where it was at the same time a year ago. If anything, the GDP [gross domestic product] data revisions may marginally dampen the UK’s growth prospects for 2023 and 2024 as they reduce the potential for bounce-back growth."
Meanwhile, the data confirmed that GDP is now estimated to be 1.8% above pre-COVID levels, meaning a small growth upgrade for 2022 overall (4.3% up from 4.1%) alongside a bump of 0.2% in q1 (0.3% vs 0.1%).
“We know that the British economy recovered faster from the pandemic than anyone previously thought and data out today once again proves the doubters wrong," said chancellor Jeremy Hunt. "We were among the fastest countries in the G7 to recover from the pandemic and since 2020 we have grown faster than France and Germany."
“The best way to continue this growth is to stick to our plan to halve inflation this year, with the IMF forecasting that we will grow more than Germany, France, and Italy in the longer term," he added.
There were indications in the data that people's financial situations are improving. The household saving ratio grew by 9.1% in the latest quarter, up from 7.9% in the first quarter of the year, with income (driven by a rise in social benefits together with increased wages and salaries) growing more than expenditure, the ONS said.
Real households' disposable income grew by 1.2% in the second quarter following no change in the previous quarter.
UK gross domestic product is estimated to have increased by 0.2% in Quarter 2 (Apr to Jun) 2023, unrevised.
It is now estimated to have increased by 0.3% in Quarter 1, revised up from 0.1%, whilst growth across all quarters of 2022 is unrevised.
➡️ https://t.co/H2PEz3rJrw pic.twitter.com/qJ5sznDfD4— Office for National Statistics (ONS) (@ONS) September 29, 2023
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The FTSE 100 (^FTSE) looked set to open 0.3% higher on Friday following the news.
Earlier this week, consultants at KPMG predicted UK growth is expected to slow over the remainder of this year and into 2024.
High interest rates, continued uncertainty and low productivity could see the UK struggle to keep its head above water in the second half of the year – with GDP growth forecast at 0.4% in 2023 and 0.3% in 2024, according to KPMG’s latest UK Economic Outlook.
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