Official statistics released by the Office for National Statistics indicated that UK economic growth decelerated during the second quarter of the year, expanding by 0.4% compared to 0.6% in the preceding quarter. The slowdown reflected the initial impacts of the ongoing Middle East conflict on the broader economy, particularly through elevated energy prices affecting household and business costs.
Despite the moderation in growth, economists noted that the UK economy demonstrated greater resilience to external shocks than previously expected. The services sector expanded by 0.5% during the quarter, with particularly strong performance in information and communication businesses, which grew 2.7% driven by computer programming activity. Construction output increased by 0.3%, while industrial production remained flat. Monthly data for June showed stronger-than-anticipated growth of 0.3%, which analysts attributed partly to favorable weather conditions and consumer spending patterns related to international sporting events.
Energy sector disruptions resulting from geopolitical tensions that intensified in late February contributed to upward pressure on oil and gas prices. While a price cap initially protected consumer utility bills, the mechanism reset in July with a 13% increase. Economists anticipate that sustained elevated energy costs will constrain economic growth through the remainder of the year, potentially creating challenges for policymakers and businesses alike.
The economic data emerges as the new chancellor prepares to present his first budget, with potential pressure to announce additional support measures for households and businesses facing high costs. Inflation readings for July are expected to exceed June’s figure of 2.6%, reflecting the impact of rising utility expenses, which could complicate monetary policy decisions at the Bank of England. Business representatives warned that despite demonstrated economic resilience, underlying cost pressures continue to pose significant long-term headwinds to sustainable growth.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI