UK’s momentum remains ‘healthy’ ahead of latest GDP figures

New figures are expected to show that the economy’s surprisingly strong start to 2024 will continue into the second half of the year in a boost for Keir Starmer’s Labour government.

Economists think that the latest monthly GDP figures, set to be released on Wednesday, will show that the economy grew 0.3 per cent in July.

The solid expansion will likely be driven by consumer-facing parts of the services sector, which have benefited from an improvement in the weather.

Figures out last month showed that retail sales volumes climbed 0.5 per cent month-on-month in July, having fallen 0.9 per cent in June due to poor weather.

Survey data also suggests that broader business activity has picked up slightly since June, although it remains some way off the pace set at the beginning of the year.

“The UK’s growth momentum remains healthy,” Kallum Pickering, head of economics at Peel Hunt, said.

The UK was the fastest growing economy in the G7 in the first half of the year, surprising many pundits who had expected another yet of relative stagnation.

GDP grew 0.6 per cent in the second quarter, having notched a 0.7 per cent expansion in the first three months of the year.

Most economists think that the pace of growth will slow over the remainder of the year, but the UK is still on track to grow around 1.1 per cent in 2024, well ahead of the 0.3 per cent pencilled in by analysts last December.

Economic growth has been at the heart of Labour’s agenda with Starmer claiming wealth creation is his “number one priority“.

Since entering office, ministers have announced ambitious plans to overhaul the planning regime as well as proposals to help the long-term sick back into work, but many businesses are cautious about what the autumn might bring.

Chancellor Rachel Reeves has reportedly been considering a number of different tax hikes to help plug an alleged £22bn blackhole in the public finances. While Reeves has ruled out any changes to corporation tax, Reeves has not ruled out potentially hiking capital gains tax or introducing a windfall tax on the banks.

Kaley Crossthwaite, a partner at BDO, said the coming months will be “crucial in determining whether the UK can maintain its recovery momentum”.

“No doubt all eyes will be on the Autumn budget and the government’s plans for helping business,” Crossthwaite said.