Warm June weather spurs UK economy

Official figures reveal that higher temperatures in June had a more positive impact on the UK’s economic growth than anticipated. The warmer weather particularly benefited the hospitality sector, including pubs and restaurants, as well as the construction industry, contributing to an economic expansion of 0.5%. This upturn meant that the economy grew by 0.2% between April and June.

Despite this encouraging data, concerns persist about the UK’s long-term growth prospects due to issues such as strikes by NHS workers. Darren Morgan, Director of Economic Statistics at the Office for National Statistics (ONS), outlined three key factors influencing the UK in June: the number of working days, weather conditions, and industrial action.

Morgan noted that while the economy rebounded from the extra Bank Holiday in May due to the King’s Coronation, the manufacturing sector, particularly the automotive industry, demonstrated resilience. The services sector also exhibited strength, driven by positive performance in publishing, car sales, and legal services. However, these gains were somewhat offset by declines in health, which suffered from further strike action.

Although June’s growth exceeded expectations, the UK remains the only G7 country that has yet to recover its pre-COVID levels of gross domestic product (GDP), as indicated by the latest quarterly data.

James Smith, Research Director at the Resolution Foundation think tank, emphasised that the growth of 0.2% in the second quarter demonstrated the UK’s “relative resilience.” The UK avoided a recession by registering a 0.1% expansion in the first three months of the year. A recession typically occurs when the economy contracts for two consecutive quarters.

However, Smith pointed out that even though the UK averted a slowdown, it might still “feel like a recession to many as families struggle with the ever-rising cost of essentials and higher mortgage repayments.”