Economy of the United Kingdom experiences a 0.6% increase in GDP during the second quarter

The UK economy expanded by 0.6% in the second quarter of the year, according to recent data, following a 0.4% expansion in May. However, the growth in June was flat, with no growth recorded, raising concerns among economists.

The services sector, including the IT industry, legal services, and scientific research, saw growth in the second quarter. This growth in the second quarter follows a growth of 0.6% in the first quarter.

Alice Haine, personal finance analyst at Bestinvest, considers the flat growth in June an "anomaly". Sam North, market analyst at investment platform eToro, suggests that the flat June GDP figure could provide the Bank of England with further justification to consider cutting interest rates next month.

The Bank of England cut interest rates from 5.25% to 5% at the start of August, the first reduction since 2020. Markets are currently pricing in around a 45% chance of another 25 basis point cut next month.

However, the Bank of England has indicated it will evaluate domestic price pressures carefully before considering another rate reduction. Capital Economics has revised down its forecast for GDP growth in 2024 from 1.3% to 1.2%.

The economy shrunk by 0.3% in the final three months of 2023, pushing the UK into a recession. The strong second quarter economic growth is attributed more to temporary factors such as large recent falls in inflation and a boost to consumer spending from events like Euro 2024, rather than a meaningful improvement in the UK's underlying growth trajectory.

Manufacturing and construction both saw output fall between April and June. Nicholas Hyett, investment manager at Wealth Club, commented that the month-on-month GDP figures were in line with economists' expectations.

Despite the positive growth in the second quarter, Haine at Bestinvest suggests the Bank may wait until November for the next rate cut. The zero growth recorded in June is an estimate and could be revised in future.

It's worth noting that there are no specific search results directly addressing the probability of further economic growth rates in the coming months under a new Labour government, therefore no exact prediction can be made based on the provided information.

In conclusion, while the UK economy has shown some growth in the second quarter, the flat growth in June and the ongoing economic challenges in manufacturing and construction suggest a more complex economic picture. The Bank of England's decision on interest rates in the coming months will be closely watched as the economy navigates these challenges.

Economy of the United Kingdom experiences a 0.6% increase in GDP during the second quarter