UK economy grows faster than expected after 0.5% rise in GDP in June

According to the data, production output was the main contributor to the growth, expanding by 1.8% in June after a fall of 0.6% in May 2023.

Meanwhile, the construction sector grew by 1.6% in June 2023, following a fall of 0.3% in May 2023; services output was up 0.2% in June 2023, after showing no growth in May 2023; and output in consumer-facing services grew by 0.5% in June 2023, following an unrevised fall of 0.2% in May 2023.

Looking at the broader picture, GDP showed 0.2% growth in the three months to June 2023 when compared with the three months to March 2023.

Following the latest GDP figures announced this morning, Mike Randall (pictured), CEO of Simply Asset Finance commented: ““Modest growth in June reflects a positive outlook for businesses as we creep closer to the Bank of England’s end of year growth forecast.

“After the latest BDO business trends report indicated that employers’ hiring intentions had dropped in June for the first time in six months, a slight increase in GDP will be welcome news for businesses looking to build their business and expand their workforces.

“However, with the economy still lagging behind industry expectations, it’s evident businesses will need more than a slight increase in GDP to maintain their confidence. With interest rates remaining high and inflation yet to reach comfortable levels, access to funding remains critical to business growth. To ensure the longevity of businesses, lenders must remain committed to supporting businesses through the ups and downs of economic waves.”

Neil Rudge, Head of Enterprise at Shawbrook said: ““The UK has followed its counterparts in Europe and the US, posting a moderate increase in GDP for Q2. SME owners around the country will breathe a small sigh of relief as macroeconomic indicators start to show marginal improvements, with inflation finally beginning to fall and the peak of the interest rate cycle now in view. Though the prospect of a recession is subsiding, sluggish growth and expensive borrowing costs continue to be obstacles that business expansion plans need to navigate.”

“Whilst the overall macro picture is beginning to look more positive, challenges are still present for SMEs. One area where this is evident is the Labour market, which is bearing the effects of slow activity. Earlier this week KPMG released its latest report on jobs, showing permanent hirings falling to the lowest rate seen in three years. This illuminates one of the many challenges businesses are facing in the current environment. Unique problems often require creative solutions and specialist lending remains a strong option for SMEs trying to navigate a complex environment.”