11/08/2023
UK economy leaps 0.5% in June, beating expectations
• GDP grew 0.5% in June, and 0.2% between April to June
• UK services sector saw growth of 0.2%
• Production output surged 1.8% in June
• Construction also bounced back from a weak May, up 1.6%
• The UK Economy is now 0.8% above its pre-pandemic level
Jonathan Moyes, Head of Investment Research, Wealth Club
“It was pleasing to see the UK produce a more upbeat 0.5% for June, this was much stronger than consensus forecasts, which called for around 0.2% growth. On a quarterly basis, the economy remains in the slow lane, with GDP up 0.2%. This is the sixth quarter in a row where growth was 0.2% or less.
The UK is by no means out of the woods. June’s hot weather flattered the growth figures, this get out of jail free card will only be played the once. A dismal July and August is likely to weigh on consumer spending for Q3. Add to this the UK’s dominant services sector showing signs of slowing, and it is a challenge to reconcile how the U.K. economy can escape a recession after such a steep rise in interest rates.
However, forecasters have long predicted a recession that has yet to arrive. The economy may continue to find a way to muddle through. News of wage growth surpassing inflation for the second half of the year May provide the confidence the economy needs to avoid falling into recession.”
