The United Kingdom’s economy continued to display resilience in the second quarter of 2024, with real GDP growing by 0.6% quarter-on-quarter, according to the latest data from the Office for National Statistics (ONS). Although slightly lower than the 0.7% growth recorded in the first quarter, this positive performance underscores the sustained momentum in the UK’s economic activities.
A detailed analysis of the GDP breakdown reveals that general government expenditure played a key role in supporting growth, increasing by 1.4% quarter-on-quarter. This was largely driven by heightened activities in public administration, defense, and the education sector, despite a weaker performance in the health sub-sector.
Household consumption also contributed to the GDP growth, rising by 0.2% quarter-on-quarter, though at a slower pace compared to the 0.4% increase seen in the previous quarter. The resilience in household spending was evident in increased expenditures on transport, housing, recreation, and culture.
In terms of investment, gross fixed capital formation grew by 0.4% quarter-on-quarter, down from 0.9% in the first quarter. This deceleration was attributed to weaker business investment, which offset gains in activities related to buildings, structures, and intellectual property products.
On a year-on-year basis, the UK’s GDP grew by 0.9% in the second quarter, up from 0.3% in the first quarter. Despite concerns about elevated interest rates and sluggish wage growth potentially dampening demand in the near term, the UK economy is expected to remain resilient.
Improved consumer confidence, bolstered by expectations of a further rate cut by the Bank of England (BoE), is expected to support economic activities as the International Monetary Fund (IMF) projects the UK economy to grow by 1.5% year-on-year in 2024, a significant improvement from the modest 0.1% growth recorded in 2023. This outlook reflects cautious optimism that the UK can navigate current economic challenges while maintaining steady growth throughout the year.
