The UK economy expanded by 0.6% in the second quarter of 2024, aligning with economists' predictions and following a swift 0.7% recovery in the first quarter after
a mild recession in the latter half of 2023, according to official data.
For June, the UK’s gross domestic product (GDP) remained unchanged, matching economists' expectations from a Reuters poll. Compared to June 2023, the GDP was 0.7% higher, as reported by the Office for National Statistics on Thursday.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, commented, “These figures confirm that the UK's recovery from recession gained momentum in the second quarter, despite strike actions and wet weather causing a stagnation in June.”
However, Thiru anticipated a slowdown in growth during the latter half of 2024, citing high-interest rates—still near a 16-year peak despite a recent Bank of England cut—as well as ongoing supply chain constraints and slower wage growth.
The market response to the data was muted.
Earlier this month, the Bank of England revised its annual growth forecast for 2024 upwards to 1.25% from 0.5%, reflecting a stronger-than-expected start to the year and anticipating 0.7% quarter-on-quarter growth in the three months ending in June.
Despite this positive outlook, the Bank of England remained cautious about the remainder of 2024, projecting growth to slow to 0.4% in the third quarter and 0.2% in the final quarter, which it considers closer to the economy's underlying growth rate.
Since the COVID-19 pandemic, the UK economy has seen modest growth, expanding only 2.3% between the fourth quarter of 2019 and the second quarter of 2024. Among the world’s largest advanced economies, only Germany, heavily impacted by soaring energy costs following Russia’s invasion of Ukraine, has fared worse.
Prime Minister Keir Starmer, during his campaign leading up to the July 4 election, expressed a goal for the economy to achieve annual growth of 2.5%, a rate the UK has not consistently reached since before the 2008 financial crisis.
Finance Minister Rachel Reeves set a more specific target, aiming for the UK to have the fastest per capita GDP growth among the Group of Seven advanced economies for two consecutive years.
However, Thursday’s data revealed that output per head in Q2 2024 was 0.1% lower than a year earlier and 0.8% below pre-pandemic levels.
Reeves acknowledged the challenges highlighted by the latest data and reiterated her commitment to making difficult decisions to strengthen the country’s economic foundations.
The growth in output per hour worked has decelerated in most advanced economies since the late 2000s, curbing improvements in living standards. In the UK, these challenges have been compounded by long-standing domestic issues, including low business investment, which worsened following the 2016 vote to leave the European Union. Photo by Londoneye at the English-language Wikipedia.