Britain’s economy grew at a slower pace in the second quarter than initially estimated despite signs of improvement in household finances, ahead of the annual budget announcement next month.
Office for National Statistics data showed the economy grew by 0.5% in the period from April to June.
Preliminary estimates by the Office of National Statistics – for the second quarter – showed GDP growth of 0.6%, which is the same rate expected by economists.
Improved outlook
Joura Suri, an economist at PricewaterhouseCoopers, said: “Gross domestic product grew in the second quarter of this year at a pace slightly lower than initial estimates, but Britain’s economic outlook has improved significantly since the beginning of the year.”
“This is largely due to the return of inflation to the target level, the start of interest rate cuts and political stability after the elections,” he added.
The savings rate for British families rose to 10% in the second quarter of the year, up from 8.9% in the first three months, while the per capita GDP increased for the second quarter in a row, albeit at a slower pace than the first quarter.
These data represent a blow to Prime Minister Keir Starmer, who is betting on the growth of the economy to improve public services, something he promised voters.
Starmer pledged to increase the economy’s growth rate to 2.5%, which raises growth levels since the global financial crisis in 2008, and above analysts’ expectations for growth in the coming years.
Last week, Starmer said that his government had achieved “far more in 11 weeks than the previous government had achieved in the past 11 years.”
He pointed to ambitious goals set in terms of building housing, establishing a government body concerned with investing in environmentally friendly energy, and employing police officers and teachers.
The Prime Minister explained that despite laying the foundations for a possible funding cut and tax increase in the budget that must be approved by the end of next October, the government will not take the “austerity path.”
He repeated his warning that he would start “hard” but would ensure that “our public services are working properly,” pledging to exempt workers from tax increases.
Other indicators
There are other signs that the British economy has lost much momentum since the Labor Party came to power last July, in part as a result of its warnings about the state of public finances.
During last July, the British economy’s output stabilized for the third time in 4 months, with confidence declining in light of fears that the new Treasury Secretary, Rachel Reeves, would announce the new draft budget on October 30, an increase in taxes and a reduction in public expenditures with the aim of controlling the deficit. Budget.
The Bank of England (the Central Bank) expected growth to slow to 0.3% in the third quarter of this year, but indicated that there are indications that the first cut in interest rates in August, and expectations of further cuts, in addition to a decline in inflation, are things that may boost growth at a later time. Of the year.
