UK Economy Surprises with 0.4% Growth in July Despite Global Uncertainty

The UK economy has unexpectedly grown by 0.4% in July, according to official figures released by the Office for National Statistics (ONS). This growth is a boost from the services industry and businesses increasing their use of AI. The ONS data shows that the services sector drove growth in July, with output increasing by 4%, and computer programming making the largest contribution.

The increase in AI-related activities has helped to boost the sector over the past three months, with many businesses reporting large turnover related to AI and cloud computing. GDP growth in July was also aided by a 0.2% increase in production output, driven by growths in manufacturing and water supply.

However, not everyone is optimistic about the economic outlook. Yael Selfin, chief economist for KPMG, warned that despite strong activity in July, the headline growth figure masks a weaker picture for households. She pointed to consumer-facing services like retail and hospitality, which marked falls in July following an earlier summer boost.

As Chancellor John Healey prepares to deliver his first autumn Budget statement next month, he may face a 'Budget headache' if economic growth starts to dwindle, according to Suren Thiru, chief economist for the Institute of Chartered Accountants England and Wales (ICAEW). Mr. Healey has said that Britain's economy is demonstrating a welcome resilience, despite serious global uncertainty.