Economy grows fractionally, but more than expected
The economy grew fractionally in the second quarter of the year, but slowed compared to the period before, Office for National Statistics data showed.
The Chancellor described the figures as ‘positive’, with the gross domestic product (GDP) growing by 0.3 per cent for the quarter after 0.7 per cent growth in the first three months of the year.
Pressure from tariff uncertainty and tax increases were attributed to the slight slow down, but the figure was stronger than the 0.1 per cent level expected by economists after an uptick in activity in June and revised data for earlier in the quarter.
On a visit to Doncaster, Chancellor Rachel Reeves said the data, which covers April to June, was “positive” but added that there is “more to do” to drive growth in the economy.
The latest figures showed the UK economy grew by 0.4 per cent in June.
ONS director of economic statistics Liz McKeown said: “Growth slowed in the second quarter after a strong start to the year.
“The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.
“Across the second quarter as a whole, growth was led by services, with computer programming, health and vehicle leasing growing.”
Growth in June was also stronger than expected, bouncing back after two consecutive months of decline.
The month was boosted by a “strong” performance for scientific research and development, engineering and car sales.
Within the production sector, there was a strong growth in the manufacturing of electronics.
June’s 0.4 per cent reading comes after the economy contracted by 0.1 per cent in both April and May.
Speaking at a construction site in Doncaster, the Chancellor said “there’s still more to do to make sure that people in all parts of the country benefit” from growth.
She said: “We are the fastest-growing economy in the G7 for the first half of this year, with a GDP growth of 0.3 per cent this quarter, and that’s after GDP growth of 0.7 per cent the quarter before that.
“I recognise there’s still more to do to make sure that people in all parts of the country benefit from that growth, but since the general election, when I became Chancellor, the economy has grown by 1.2 per cent and GDP per capita – so for every person in the country – GDP per capita is up by 0.7 per cent.
“So, encouraging numbers today but, of course, we need to build on that to make sure people in all parts of the country are better-off.”
She also addressed speculation about potential upcoming tax rises, reportedly on inheritance taxes, which could be needed to plug a budget shortfall given self-imposed fiscal rules.
She said: “Any decision around taxation is a … decision for the Budget, and I’ll make those announcements.
“We haven’t even set the date yet for the Budget, but the key focus of the Budget is going to be to build on numbers that we’ve seen today to boost productivity and growth and prosperity all across the country.”