UK economy grows by 0.6% in second quarter of 2024

The UK economy continued its positive trajectory in the second quarter of 2024, with Gross Domestic Product (GDP) estimated to have increased by 0.6% from April to June, according to data released by the Office for National Statistics (ONS).

This growth, though slightly slower than the 0.7% increase observed in the first quarter of the year, underscores the resilience of the UK economy amidst a challenging global economic environment.

When compared to the same quarter in 2023, the UK’s GDP has grown by 0.9% in Q2 2024. This year-on-year increase highlights a steady recovery from the economic disruptions of recent years, driven primarily by the robust performance of the services sector.

In output terms, services grew by 0.8% during the quarter, marking widespread growth across the sector. This expansion in services was substantial enough to offset marginal declines in other areas of the economy, including the production and construction sectors, both of which saw a 0.1% decrease in output.

Monthly performance: A flat June

Despite the quarterly growth, the month of June saw GDP flatline, showing no growth compared to the previous month. This stagnation can be attributed to several temporary disruptions, including heavy rainfall that impacted retail activity on the high street and a junior doctors’ strike that caused significant strain on the health services sector.

In the services sector, output fell by 0.1% in June, following a 0.3% growth in May. The production sector showed some resilience, with output growing by 0.8% in June, up from a revised 0.3% in May. Meanwhile, the construction sector saw a more modest growth of 0.5% in June, though this followed a more substantial 1.7% increase in May, which was later revised down from an initial estimate of 1.9%.

Outlook

The data for the second quarter of 2024 presents a mixed picture for the UK economy. While the overall growth is encouraging, the flatlining in June raises questions about the sustainability of this recovery in the face of ongoing domestic and international challenges. The services sector remains the engine of growth, but weaknesses in production, construction, and trade indicate that the UK economy is still navigating a complex and uncertain landscape.

As the year progresses, policymakers and businesses alike will need to monitor these trends closely, particularly the factors influencing household spending and sectoral performance. The third quarter will be crucial in determining whether the UK can maintain its growth momentum or whether further interventions will be necessary to support continued economic recovery.

“A rise in GDP is an encouraging sign that business confidence is starting to filter through into the wider market, and should give Westminster reason to focus on future outcomes.

 “With the new Chancellor able to offer a bit more certainty, and the prospect of rate cuts on the horizon, the opportunity to lock in growth is very much within reach. But that mustn’t be taken for granted. The Government needs to put its money where its mouth is and turn its pledges for UK business into concrete action. 

“The upcoming Autumn Budget will serve as a key moment to achieve this, taking the ‘brakes off Britain’ and giving UK SMEs the resources they need to drive the economy forward.”