The latest UK GDP data shows a surprising growth of 0.3% in the second quarter, supported by adjustments to April figures and a strong June performance. However, overall growth continues to lag behind the previous year. Per capita GDP rose by 0.2%, but headline growth decreased from 0.7% in Q1. This weak performance is mainly due to the retraction of previously accelerated business activity linked to tariffs. Growth was led by government spending, while consumer and business investment remained subdued, with signs of declining confidence as inflation increases again.
GDP grew by 0.3% in the second quarter, influenced by an upward revision for April and a 0.4% increase in June. However, growth remains weak, not repairing public finances or boosting hiring.
Despite an encouraging uptick in GDP per head by 0.2%, headline growth decelerated from 0.7% in the first quarter, attributed to the reversal of earlier increased activity spurred by tariff concerns.
The latest data aligns quarterly growth closer to the estimated underlying trend of 0.2-0.3%, forecasted to yield an annual rate around 1%. This marks a slight improvement over stagnation but remains slow.
Growth was primarily driven by government spending and gross capital formation, while consumer spending and business investment lagged. There are rising concerns about inflation affecting consumer and business confidence.
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