By David Milliken and Andy Bruce
LONDON (Reuters) – Britain's economy grew by 0.6% in the second half of 2024, in line with economists' expectations and grew faster by 0.7% in the first quarter of the year after a shallow recession in the second half of 2023, official figures showed.
Only in June, the level of British domestic product did not change, and in line with the economic forecasts in the Reuters poll, and compared to last year it was higher by 0.7%, said the Office for National Statistics on Thursday.
“These figures confirm that the UK's recovery from recession widened in the second quarter, despite the strike and wet weather which caused activity to fall in June,” said Suren Thiru, director of economics at the Institute of Chartered Accountants in England and Wales.
However, he said he expected growth to slow in the second half of 2024 due to interest rates remaining near 16-year highs, despite the Bank of England's tapering this month, as well as continued supply constraints and slow wage growth.
There was little immediate market reaction to the data.
Earlier in the month the BoE raised its 2024 growth forecast to 1.25% from 0.5% due to a stronger-than-expected start to the year and expectations for 0.7% quarter-on-quarter growth in the three months to June.
But there was a pessimistic attitude towards the outlook for the remainder of 2024, as growth slowed to 0.4% in the third quarter and 0.2% in the final three months of the year – which it sees as close to the underlying economic growth rate.
Britain's economy has grown slowly since the COVID-19 pandemic, expanding by just 2.3% between the fourth quarter of 2019 and the second quarter of 2024.
Only Germany, which was also hit hard by rising electricity costs after Russia's invasion of Ukraine, fared worse among the world's most advanced economies.
Prime Minister Keir Starmer said he wanted the economy to grow by 2.5% a year when he campaigned for the July 4 election – a rate Britain has not reached since before the 2008 financial crisis.
Chancellor of the Exchequer Rachel Reeves has set the official target that Britain should enjoy the fastest growth in gross domestic product among the Group of Seven advanced economies for two years in a row.
Thursday's figures showed that output per head in the second quarter of 2024 was 0.1% lower than a year ago and 0.8% lower than before the pandemic.
Reeves said the latest data shows the challenge facing the new government and reiterated his view that he will need to take serious decisions to improve the economic foundations.
Hourly productivity growth has slowed in most advanced economies since the late 2000s – limiting rising living standards – and Britain's long-standing domestic problems stemming from low business investment were exacerbated by the country's 2016 vote to leave the European Union.
