London (Parliament Politics Magazine) – The UK’s economy has expanded its recovery from recession after recording an expansion of 0.6% in the three months to June, handing a growth to the chancellor, Rachel Reeves, in the run-up to the autumn budget.
How has the UK economy performed in the second quarter of 2024?
Statistics from the Office for National Statistics (ONS) reveal gross domestic product continued to increase in the second quarter, after a peak of 0.7% in the first three months of 2024. The reading reached the forecasts of City economists. However, monthly GDP expansion was flat in June as wet weather prevented shoppers from spending in what has been a washout summer for retailers.
What are the challenges facing the UK economy despite recent growth?
Ben Jones, the lead economist at the Confederation of British Industry, stated the figures indicated the economy had “finally shaken off its slumber of recent years”, but cautioned there were still challenges to sustainably expanding Britain’s long-term growth rate. “We think the quarterly information probably overstates the underlying momentum in the economy, with recent CBI surveys of activity remaining fairly subdued,” he stated. “But firms nonetheless appear confident that the recovery will continue.”
According to the fresh snapshot, service sector output expanded by 0.8% in the second quarter, powered by scientific research and development. There was also a boost in the IT, transport, law, architecture and engineering areas. Consumer-facing service output declined by 0.1%, showing a weaker period for buys of physical goods amid the expense of living crisis and poor weather hitting the retail market. Manufacturing and construction output also fell.
How does the UK’s economic growth compare to previous forecasts?
The UK has extended at a faster rate this year than many forecasters expected, in a development taken on by the shadow chancellor, Jeremy Hunt, as proof that the previous government had enabled the economy to turn a corner.
“Today’s figures are yet further proof that Labour has inherited a growing and resilient economy. The chancellor’s attempt to blame her economic inheritance on her decision to raise taxes – tax rises she had always planned – will not wash with the public,” he wrote on X.
How will the UK government address the economic challenges in the upcoming budget?
Reeves has declared rebooting the economy is Labour’s number one focus, claiming that stronger growth will support boosting living standards and raising more tax revenue to repair battered public services. The chancellor will produce an autumn budget on 30 October.
“The new government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a £22bn black hole in the public finances,” she stated.
“That is why we have driven economic growth our national mission and we are taking the difficult decisions now to fix the foundations, so we can reconstruct Britain and make every part of the country better off.”