UK Economy Grows Slightly Faster Than Thought Amid Rising Inflation

The UK economy has grown slightly faster than initially thought, according to revised figures from the Office for National Statistics (ONS). The country's GDP expanded by 0.5% between April and June this year, up from the previously reported 0.4%. This update comes against a backdrop of rising inflation due to the Iran-US war and expectations that the Bank of England will have to raise interest rates to counter it.

The improved economic growth may give the government more flexibility in tax or spending decisions ahead of the Budget on October 28th, but the difference is marginal. Danni Hewson from AJ Bell notes that 'there's no doubt' that the chancellor has one eye on the horizon and the potential for household budgets to be squeezed.

Andrew Wishart, senior UK economist at Berenberg, warns that GDP growth may slow down in the coming months due to the double squeeze of higher energy prices and interest rates. He notes that households have not yet fully felt the impact of higher energy prices, which will only rise once Ofgem's price cap is adjusted.