economy UK It posted a strong second quarter of growth as it recovered from last year’s shallow recession, but has lost momentum heading into the second half of 2024, suggesting the economy Bank of England It is still on track to cut interest rates again.
The Office for National Statistics said gross domestic product grew by 0.6% in the second quarter of 2024, after 0.7% growth in the first quarter, the fastest in more than two years.ONSin its abbreviation in English).
However, in June alone, monthly output growth slowed to zero from 0.4% in May, as heavy rains hampered retail sales and a doctors’ strike contributed to a 1.5% decline in health care activity.
the sterling It rose slightly after the data, which changed financial markets’ expectations that the Bank of England will cut interest rates once or twice this year.
Uncertainty ahead of the UK general election on July 4 – which gave Labour a large majority after 14 years in opposition – could also weigh on growth in June, said Thomas Pugh, an economist at accountancy firm RSM United.
“Overall, the UK economy has performed strongly in the first half of the year, but we need to see signs of rising incomes and confidence reflected in real spending and investment to carry growth into next year,” he said.
Suren Thiru, director of economics at the Institute of Chartered Accountants in England and Wales, expects quarterly growth to slow as fixed interest rates near 16-year highs despite England’s rate cut this month. He added that arrears growth is likely to moderate and productivity problems will persist in the long term.
Earlier this month, the Bank of England raised its annual growth forecast for 2024 to 1.25% from 0.5%, due to a stronger-than-expected start to the year and expected quarterly growth of 0.7% in the three months to June.
However, forecasts were less optimistic for the rest of 2024, with growth slowing to 0.4% in the third quarter and 0.2% in the final three months of the year – which, in the UK Monetary Authority, is closer to the economy’s core growth rate.
Emily Brontë is a journalist and feature writer specialising in culture, entertainment, literature, and current affairs. She is dedicated to producing clear, accurate reporting that helps readers stay informed about developments in the UK and around the world.
