Gross domestic product (GDP) increased by 0.5% between April and June, revised down from an initial estimate of 0.6%, official Government data shows.
Compared with the same quarter a year ago, real GDP is estimated to have increased by 0.7% in Q2 2024, according to the Office for National Statistics (ONS)
The figures show that the UK economy continued its recovery from recession at the end of last year, albeit at a slightly slower pace than previously thought.
The ONS said the quarterly path of real GDP at an aggregate level is largely unchanged from 2023 onwards, however, there have been downward revisions of 0.1 percentage points in Q1 2023 and Q2 2024.
In output terms, services grew by 0.6% in Q2 2024 with widespread growth across the sector; this was partially offset by falls in both the production and construction sectors.
Real households’ disposable income (RHDI) is estimated to have grown by 1.3% in Q2 2024, down from 1.6% in the previous quarter. The household saving ratio is estimated at 10.0% in the latest quarter, up from 8.9% in Quarter 1 2024.
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Liz McKeown, director of economic statistics for the ONS, said: “Today’s updated GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated information about the relative size of each industry for the first time.
“However, after taking on these improvements, the quarterly growth path across the last 18 months is virtually unchanged.
“Our latest data show that household savings continue to increase and are now at their highest rate since the Covid-19 lockdowns.”
‘Could have significant impact on GBP’
Russell Gous, editor-in-chief of TopMoneyCompare, said: “The news that the UK grew 0.5% rather than the 0.6% previously thought in the Spring may only sound like a small setback, but it could have a significant impact on GBP in the coming days.”
“This disappointing downgrade could weaken investor confidence in the pound, leading to a potential dip in its value as foreign investors look for better returns elsewhere.”
Gous added: “It remains to be seen if this news will impact the Bank of England’s base rate decision next month. It still feels likely that we will see a cut on 7 November, but any more indicators that growth is stagnating could force them to reconsider. Another hold could be good news for GBP but would be a hammer blow for borrowers who now expect to see lower rates before the end of the year.
“For consumers, any potential weakening of the pound could mean higher costs for imports and travel abroad, while UK exporters might benefit from a cheaper pound. However, the immediate outlook suggests the pound is likely to feel the strain of this stagnant growth.”
This article was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: UK economy growing slower than predicted
