UK economy: Hot weather helps UK stave off recession as GDP grows unexpectedly

Hot weather helped Britain to shrug off recession, ONS chief says

The UK has staved off a recession for now after the economy grew by 0.2 per cent between April and June, latest figures show.

Data from the Office for National Statistics showed that gross domestic product (GDP) rose by 0.5 per cent in June, helped by the manufacturing sector.

Economists had expected GDP to grow by 0.2 per cent in June and to remain flat in the quarter as a whole. By comparison, it grew by 0.1 per cent in the first quarter of the year.

ONS director of economic statistics Darren Morgan said: “The economy bounced back from the effects of May’s extra bank holiday to record strong growth in June. Manufacturing saw a particularly strong month with both cars and the often erratic pharmaceutical industry seeing particularly buoyant growth.

“Services also had a strong month with publishing and car sales and legal services all doing well, though this was partially offset by falls in health, which was hit by further strike action.

“Construction also grew strongly, as did pubs and restaurants, with both aided by the hot weather.”

Rishi Sunak said the government’s plan was working, adding: “This is good news. At the beginning of the year I made growing the economy one of my top priorities, and we are making progress.

“There’s still more work to do, but today’s figures show the plan is working.’’

Chancellor Jeremy Hunt said: “The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.

“The Bank of England are now forecasting that we will avoid recession, and if we stick to our plan to help people into work and boost business investment, the IMF have said over the longer term we will grow faster than Germany, France and Italy.”

It means that quarterly GDP is still 0.2 per cent below where it was in the final three months of 2019, before the Covid-19 pandemic hit and forced the country into lockdown.

Businesses told the ONS their output had increased in June in order to make up for the extra bank holiday in May.

The statisticians found that the health and social work sector had weighed on GDP in June, shrinking by 0.8 per cent. There were four days of strikes by junior doctors during the month although nurses had not been on strike.

The new data puts the UK on a better course to avoid falling into a recession, which is defined as two quarters in a row where GDP shrinks.

However, forecasts from the Bank of England see growth remaining sluggish for years to come.

Labour shadow chancellor Rachel Reeves said: “Growth in the economy is still on the floor.

“Thirteen years of economic mismanagement under the Conservatives has left Britain worse off and trapped in a low-growth, high-tax cycle.

“Labour’s plan for the economy will boost growth, increase wages and bring down bills so working people are better off.”

A Treasury minister said it was “very difficult” to achieve higher levels of growth when “you are dealing with inflation pressures”.

Asked about the latest GDP data on Sky News, John Glen said: “I think what it shows is there’s a lot of resilience in the UK economy. We saw a record upgrade from the IMF [International Monetary Fund] of 0.7 per cent higher for the UK economy this year. That’s welcome news. When I started in office nine-and-a-half months ago, recession was predicted.

“But of course, you know, I would like that figure to be higher, but we are in the middle of the pack with respect to our peers in the G7.”