UK Economy Shows Resilience Despite Iran War Impact

The UK economy showed resilience in July, growing by 0.4% despite the impact of the Iran war, according to the Office for National Statistics (ONS). This growth is a slight improvement from June's 0.3%, and it beats expectations of a contraction.

The services sector led the way, expanding by 0.6% over the three months to July, while AI-related activity provided an additional boost. Within services, computer programming was the largest contributor, with ongoing strength seen throughout the year.

However, production and construction both contracted by 0.5%, a trend that continues from recent months. The ONS Director of Economic Statistics Liz McKeown noted that while growth remained relatively robust, it was partially offset by falls in these sectors.

Economists and industry leaders have mixed views on the outlook for the economy. Anna Leach, Chief Economist at the Institute of Directors, cautioned that the resilience shown so far may not withstand a tougher autumn, with rising inflation, household income squeeze, and tightened financial conditions ahead.