The UK economy is expanding according to the Q2 forecast by Reuters

By David Milliken and Andy Bruce

LONDON (Reuters) – Britain’s economy grew 0.6 percent in the second quarter of 2024, in line with economists’ expectations and building on a brisk 0.7 percent recovery in the first quarter of the year after a recession superficial from the second half of 2023, according to the official. the figures presented.

In June alone, the level of Britain’s gross domestic product was also unchanged, in line with economists’ forecasts in a Reuters poll, and compared with a year earlier it was 0.7% higher, it said Thursday Office for National Statistics.

“These figures confirm that Britain’s recovery from recession gained momentum in the second quarter, despite strikes and wet weather causing a lull in activity in June,” said Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales.

However, he said he expected growth to slow in the second half of 2024 due to interest rates remaining close to 16-year highs despite this month’s cut by the Bank of England, as well as lingering constraints of supply and slower wage growth.

There was no immediate market reaction to the data.

Earlier in the month, the BoE raised its annual growth forecast for 2024 to 1.25% from 0.5%, thanks to a stronger-than-expected start to the year and expectations of 0.7% quarterly growth in the three months until June.

But he was less optimistic about the outlook for the rest of 2024, noting growth slowed to 0.4% in the third quarter and 0.2% in the final three months of the year – which he sees as closer to the rate of underlying growth of the economy.

The UK economy has grown slowly since the COVID-19 pandemic, expanding by just 2.3% between the fourth quarter of 2019 and the second quarter of 2024.

Only Germany, which was also hit hard by rising energy costs after Russia’s invasion of Ukraine, fared considerably worse among the world’s largest advanced economies.

Prime Minister Keir Starmer said he wanted the economy to achieve annual growth of 2.5% when he campaigned ahead of the July 4 election – a rate Britain has not regularly achieved since before the 2008 financial crisis .

Chancellor of the Exchequer Rachel Reeves has set a more formal target for Britain to enjoy the fastest growth in gross domestic product per head of the Group of Seven advanced economies for two consecutive years.

Thursday’s figures showed that output per capita in the second quarter of 2024 was 0.1% lower than a year earlier and was 0.8% lower than before the pandemic.

Reeves said the latest data showed the challenge facing the new government and reiterated his position that he would need to take tough decisions to improve economic fundamentals.

Output growth per hour worked has slowed in most advanced economies since the late 2000s – limiting the rise in living standards – and Britain’s long-standing domestic headwinds from low business investment were exacerbated by the public’s 2016 vote to leave the Union European.