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The UK economy expanded less than anticipated in the second quarter of the year as chancellor Rachel Reeves prepares to deliver her first budget.
According to the Office for National Statistics (ONS), the UK’s gross domestic product (GDP) rose by 0.5% in the three months to June, a downward revision from earlier estimates of 0.6% growth.
The latest figures indicate that the UK is continuing its recovery from last year’s recession, albeit at a slower pace than previously thought. Growth was primarily driven by the services sector, while both manufacturing and construction sectors underperformed, contributing to the subdued overall GDP figure.
In contrast, the economy recorded a growth of 0.7% in the first quarter of the year, a figure that remains unchanged.
Liz McKeown, ONS director of economic statistics, said the updated figures included new survey data, VAT returns and updated information about the size of different industries.
“After taking on these improvements, the quarterly growth path across the last 18 months is virtually unchanged,” she said.
The data has emerged as the Labour government, which has made economic growth one of its key policies, prepares to announce its first budget in four weeks’ time.
The figures ONS figures also revealed a continued increase in the UK household savings rate, which rose to 10% in the second quarter, up from 8.9% in the first quarter. This marks the highest savings rate since the COVID-19 lockdowns.
Notably, non-pension savings contributed 5.4 percentage points to the savings ratio, marking the first time since the pandemic that non-pension savings have outpaced pension savings.
“Our latest data show that household savings continue to increase and are now at their highest rate since the COVID-19 lockdowns,” said McKeown, underscoring a shift in financial behaviour as consumers prioritise saving in an uncertain economic climate.
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