

Market Analysis
Britain's economy expanded by 0.6% in the second quarter of 2024, aligning with economists' expectations and following a strong 0.7% rebound in the first quarter after a mild recession in the latter half of 2023, according to official data.
In June, the UK's gross domestic product remained unchanged, consistent with economists' projections from a Reuters poll, and showed a 0.7% increase compared to the same period last year, as reported by the Office for National Statistics on Thursday.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, stated, "These figures confirm that the UK's recovery from recession gained momentum in the second quarter, despite disruptions from strike action and unfavorable weather conditions that stalled activity in June."
However, Thiru cautioned that economic growth is likely to decelerate in the latter half of 2024 due to interest rates hovering near a 16-year high, despite a recent Bank of England rate cut, along with ongoing supply chain issues and slower wage growth.
The market reaction to the data was minimal.
Earlier this month, the Bank of England revised its annual growth forecast for 2024 upward to 1.25% from 0.5%, citing a stronger-than-expected start to the year and predicting 0.7% quarter-on-quarter growth for the three months ending in June.
However, the Bank was less optimistic about the outlook for the rest of 2024, projecting growth to slow to 0.4% in the third quarter and 0.2% in the final quarter, which it believes is closer to the economy's underlying growth rate.
Since the COVID-19 pandemic, the UK's economic growth has been sluggish, with an expansion of just 2.3% between the fourth quarter of 2019 and the second quarter of 2024.
Among the world’s largest advanced economies, only Germany, which also suffered from surging energy costs following Russia's invasion of Ukraine, has fared worse.
Prime Minister Keir Starmer, during his campaign leading up to the July 4 election, set a goal for the economy to achieve 2.5% annual growth—a rate Britain has not consistently reached since before the 2008 financial crisis.
Finance Minister Rachel Reeves set a more specific target, aiming for Britain to lead the Group of Seven advanced economies in per capita GDP growth for two consecutive years.
Thursday’s data revealed that output per capita in the second quarter of 2024 was 0.1% lower than a year earlier and 0.8% below pre-pandemic levels.
Reeves acknowledged the challenge facing the new government and reiterated her commitment to making difficult decisions to strengthen the country’s economic fundamentals.
Growth in productivity, as measured by output per hour worked, has slowed in most advanced economies since the late 2000s, limiting improvements in living standards. Britain's long-standing issues with low business investment have been further compounded by the public's decision to leave the European Union in the 2016 referendum.
Paraphrasing text from "Reuters" all rights reserved by the original author.