LONDON (Reuters) – Britain’s economy grew more slowly than expected in the second quarter, Office for National Statistics (ONS) figures showed on Monday, but household finances and business investment showed losses. positive signs, which Finance Minister Rachel Reeves could take into account in her preparation of next month’s budget.
Economic output increased by 0.5% between April and June, according to ONS figures, slightly below the preliminary estimate of 0.6% growth in gross domestic product (GDP).
Economists polled by Reuters had expected the 0.6% rise to be confirmed.
The household savings rate increased from 8.9% to 10% during the first three months of 2024.
Savings figures as well as above-inflation wage growth, as well as a still strong jobs market, mean households are likely to remain confident about future income prospects, according to Sandra Horsfield, economist at Investec.
“In other words, there is enough fuel in the tank for consumer spending to continue to rise even as the above-inflation wage rise eases,” she adds.
GDP per capita grew for the second consecutive quarter, although more slowly than in the first quarter.
Rachel Reeves suggested increases for certain taxes in her first budget on October 30. Recent surveys have revealed falling consumer and business sentiment, partly due to concerns over the UK budget.
However, the finance minister also suggested a possible relaxation of public debt rules, paving the way for more borrowing that could boost investment and the broader economy.
The Bank of England (BoE) expects economic growth to slow to 0.3% in the third quarter.
Lowering interest rates in August and the expectation of further cuts, as well as falling inflation are likely to boost growth later in the year, according to the BoE.
The data showed a jump in business investment, which rose 1.4% in the second quarter, for the third time in a row.
Overall, UK GDP growth during this period was stronger than the Eurozone’s 0.2% expansion.
(Reporting Suban Abdulla; French version Mara Vîlcu; edited by Augustin Turpin)
