The UK economy expanded by 0.3% in the second quarter of 2024, official figures show, outperforming forecasts of a slowdown to 0.1% made by City economists and the Bank of England. The growth rate, however, was lower than the 0.7% recorded in the first quarter.
Data from the Office for National Statistics (ONS) revealed that the economy grew by 0.4% in June, following two consecutive months of contraction. The ONS also revised its initial estimate for April's GDP decline from -0.3% to -0.1%.
The services sector, which dominates the UK economy, expanded by 0.4% in the quarter, driven by computer programming, health, and vehicle leasing. Construction output rose by 1.2%, supported by large infrastructure projects, while manufacturing grew by 0.3%.
Chancellor Rachel Reeves described the figures as positive but acknowledged the need for further action to boost the economy. She said: 'I know that the British economy has the key ingredients for success but has felt stuck for too long.'
Despite the slowdown, the UK remains the fastest-growing G7 economy in the first half of 2024, pending data from Japan. However, economists warn of headwinds from global trade tensions and domestic challenges. James Smith, an economist at ING, said: 'We expect growth to slow in the second half.'
The stronger-than-expected growth may complicate the Bank of England's plans for further interest rate cuts, as it could fuel inflationary pressures. Business investment fell by 4% in the quarter, highlighting ongoing uncertainty among firms.
