Britain’s economy showed signs of recovery from the recession as it posted a 0.6% increase in GDP from April to June, according to official figures released on Thursday. This growth followed a 0.7% rise in the first quarter and aligned with economists’ forecasts, providing a positive development for the new Labour government in the U.K. that aims to revitalize the economy. Liz McKeown, the director of economic statistics at the Office for National Statistics, highlighted the country’s strong growth for two consecutive quarters following a period of weakness seen in late 2023.
The service sector, especially technology, scientific research, and legal services, led the growth, offsetting some weaknesses in retail and decreased output in the TV and film production industry due to the lingering effects of the Screen Actors Guild strikes in the U.S. in 2023. The U.K. economy slipped into recession in late 2023 when GDP contracted by 0.3% in the last quarter of the year, impacting all three primary sectors – services, industrial production, and construction.
Rachel Reeves, the new Treasury chief in Britain, recently emphasized the government’s focus on stimulating economic growth and undoing what she described as “14 years of chaos and economic instability” under previous Conservative administrations. Despite the positive second-quarter figures, some economists cautioned that growth might decelerate in the upcoming months. June saw flat GDP growth, with a 0.1% contraction in the service industry, signaling potential challenges ahead.
Peter Arnold, the chief economist at Ernst and Young U.K., voiced a more optimistic outlook, expecting the economy to sustain a decent growth pace, albeit potentially below the elevated rates observed in the first half of 2024.