UK economy grows unexpectedly rapidly in June by 0.2%

The UK economy grew by 0.2% in the second quarter of the year as it showed a surprisingly good performance in June.

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

Economists had expected GDP to grow by 0.2% in June and 0.0% in the quarter as a whole. It grew by 0.1% 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.”

It means that quarterly GDP is still 0.2% 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 that their output had increased in June in order to make up for the extra bank holiday in May.

The statisticians found that the human health and social work sector had weighed on GDP in June, shrinking by 0.8%. 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.

Chancellor of the Exchequer 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 (International Monetary Fund) have said over the longer-term we will grow faster than Germany, France and Italy.”

The value of sterling jumped slightly following the news. One pound could buy a little over 1.27 dollars, a rise of 0.3% on the day.

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.”