UK Economy Surprisingly Expands 0.4% in July Despite Soaring Energy Costs

The UK economy unexpectedly expanded by 0.4% in July, exceeding economists' forecasts of no growth at all.

This uptick follows a 0.3% increase in June and stagnation in May, providing some support for Chancellor John Healey ahead of next month's Budget.

The Office for National Statistics cited services as the main driver of July's performance, with artificial intelligence and related technology also contributing to growth over the past three months.

Economists warned that higher energy prices and borrowing costs could undermine the recovery, however. Martin Beck from WPI Strategy noted that sustained high oil prices above $100 a barrel will lift inflation, squeeze household spending power, and make the Bank of England's job more difficult.