UK Economy Grows 0.6% in Second Quarter, Flatlining in June Due to Election and Industrial Disputes
The Office for National Statistics (ONS) has released new official figures showing that the UK economy grew 0.6% over the course of three months. However, the ONS also reported that there was no growth at all in June, with businesses delaying purchases until after the general election.
According to the ONS, “In a range of industries across the economy, businesses stated that customers were delaying placing orders until the outcome of the election was known.” The exact impact of this delay is difficult to quantify, but it was a contributing factor to the flatlining of the economy in June.
The ONS also noted that strikes, including the junior doctors’ strike, played a role in the lack of growth in June. Additionally, international industrial disputes, such as the US Screen Actors Guild strike, continue to affect UK production schedules.
The GDP number for June fell from the previous month, when the economy expanded 0.4%. However, overall GDP – the measure of everything produced in the UK – expanded from April to June.
Compared to other industrialized nations, the UK’s growth rate was the second highest among the G7 group. Only the United States performed better at 0.7%. However, two G7 countries, Japan and Germany, have yet to publish their GDP data for the same period.
When looking at the first half of the year, the UK has the highest growth rate with 0.7% GDP growth in the first three months. This growth was driven by production in scientific research, the IT industry, and legal services, according to the ONS.
The second quarter of growth means that the UK has officially left behind the recession that occurred at the end of 2023. The economy met the definition of recession when it shrank for two consecutive three-month quarters.
The UK government has placed a high priority on economic growth, with plans to use it to fund public sector investments and reduce national debt without increasing borrowing. Chancellor Rachel Reeves stated, “That is why we have made economic growth our national mission and we are taking the tough decisions now to fix the foundations, so we can rebuild Britain and make every part of the country better off.”
However, not everyone is celebrating the latest GDP numbers. Former chancellor and now shadow chancellor Jeremy Hunt challenged the government’s assessment, saying, “Today’s figures are yet further proof that Labour has inherited a growing and resilient economy.” He also criticized the government’s decision to raise taxes, which they had planned all along, as an excuse for the economic challenges they face.
