New data from the Office for National Statistics (ONS) reveals that economic growth in the UK was weaker than initially reported during the spring. According to the revised figures, the gross

domestic product (GDP) grew by 0.5% between April and June, down from the original estimate of 0.6%.

The modest growth was largely driven by the services sector, while the manufacturing and construction industries dragged on the overall performance, the ONS noted.

These figures confirm that the UK economy continued its recovery from the recent recession, but at a slightly slower pace than previously thought. A technical recession occurs when there are two consecutive quarters of negative growth.

First-Quarter Growth and Annual Revisions

GDP growth in the first quarter of 2023, between January and March, remained unrevised at 0.7%, marking the official end of the shallow recessionary period. Over the entire year of 2023, the UK economy is now estimated to have grown by 0.3%, a slight improvement from the earlier estimate of 0.1%.

This adjustment was supported by stronger income data, including employee wages and corporate profits, which helped boost the overall figures.

Liz McKeown, ONS Director of Economic Statistics, explained: "Today's updated GDP figures for 2023 and 2024 include new data from annual surveys, VAT returns, and updated information on the size of different industries for the first time. Despite these updates, the overall quarterly growth path over the last 18 months remains virtually unchanged."

Household Savings on the Rise

In addition to GDP data, the ONS highlighted a continued increase in household savings. The household saving ratio rose to 10% in the latest quarter, up from 8.9% at the beginning of the year. This indicates that more people are setting aside a greater portion of their disposable income, reaching the highest savings rate since the Covid-19 lockdowns.

Challenges Ahead

Despite two quarters of positive growth, more recent data shows the UK economy has been stagnating, with no growth recorded in both June and July.

Chancellor Rachel Reeves acknowledged the scale of the challenges ahead, stating, “I am under no illusion about the scale of the challenge the country faces. Change will not happen overnight. Two quarters of positive economic growth does not make up for 14 years of stagnation.”

The outlook remains cautious as the UK continues to navigate the economic challenges posed by slow growth and the need for long-term recovery strategies.