Business

Economic growth ‘weaker than first thought’, revised figures show

ONS says GDP rose 0.5% in the April-June quarter - not 0.6% as previously estimated

UK national debt stood at 99.4% of GDP, according to Office for National Statistics estimates for July
The UK's economy only grew at 0.5% over the April-June quarter - below the 0.6% the ONS first said (Gareth Fuller/PA)

Growth across the UK economy was weaker than previously thought over the spring, according to revised official figures.

The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.5% between April and June, revised down from an initial estimate of 0.6%.

Growth was driven by an increase in the services sector, while the manufacturing and construction industries industry dragged on the headline figure, the ONS said.

The figures show that the UK economy continued its recovery from recession at the end of last year, albeit at a slightly slower pace than previously thought.

A technical recession is defined as two consecutive quarters of negative growth.

GDP increased by 0.7% over the first quarter, between January and March, unrevised figures showed, marking the end of the shallow recessionary period.

Meanwhile, the ONS said that GDP across 2023 is now estimated to have increased by 0.3%, up from the first estimate of 0.1%.

Stronger income data, including pay for employees and profits of businesses, helped boost the overall figure.

Liz McKeown, director of economic statistics for the ONS, said: “Today’s updated GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated information about the relative size of each industry for the first time.

“However, after taking on these improvements, the quarterly growth path across the last 18 months is virtually unchanged.

“Our latest data show that household savings continue to increase and are now at their highest rate since the Covid-19 lockdowns.”

Chancellor Rachel Reeves prepares her Labour Party conference keynote speech in her hotel room in Liverpool
Chancellor Rachel Reeves says she is “under no illusion" about the scale of the challenge the UK economy faces (Stefan Rousseau/PA)

The household saving ratio is estimated at 10% in the latest quarter, up from 8.9% over the start of the year, meaning people were keeping more of their disposable income locked into savings.

More recent data shows that the economy has been flatlining, with no growth recorded in both June and July.

It prompted Chancellor Rachel Reeves to say she was “under no illusion about the scale of the challenge” the country faces, and that “change will not happen overnight”.

“Two quarters of positive economic growth does not make up for 14 years of stagnation,” she added.