UK Economy Revised Up Slightly to 0.5% Growth in Second Quarter

The UK economy experienced a slight revision in its growth rate for the second quarter of this year. According to revised data from the Office for National Statistics (ONS), the quarterly GDP growth came in at 0.5%, up from the initial estimate of 0.4%. This increase was mainly driven by stronger figures in the services sector, with a growth rate of 0.6% compared to the previous estimate of 0.5%. Professional, scientific and technical services were among the key contributors to this growth, along with advertising, scientific research, legal services, and computer programming.

The construction sector also expanded by 0.8%, while production output fell by 0.1%. Additionally, household finances showed improvement, with real household disposable income per head rising by 1.0% after a decline of 0.8% in the first quarter. However, experts note that the economy is still facing significant challenges due to high borrowing costs, inflationary pressures, and a cooling labor market.

Richard Carter, head of fixed interest research at Quilter Cheviot, stated that 'growth has come in marginally better than initially expected, but it remains difficult to come by as households and businesses contend with these economic challenges.' He also warned that the recent surge in energy prices and borrowing costs has made the outlook uncertain. With Chancellor John Healey set to unveil the budget on October 28, markets will be closely watching for a credible plan to balance fiscal discipline with supporting economic growth.