UK Economy Expands in Q2-2023
The economy of the United Kingdom (UK) expanded in the second quarter of the year 2023, according to the statistics office, consolidating on the previous quarterly growth – having shaken off a recession tantrums.
The gross domestic product (GDP) grew by 0.6% year-on-year during the second quarter of 2023, up from a preliminary estimate of 0.4%. Growth in the first quarter was revised up to 0.3% from a previously reported 0.1%, according to data from the Office for National Statistics released Friday.
An upward revision to the prior quarter’s figures indicates the economy could be withstanding some of the pressures from high inflation and a cost-of-living crisis.
Household consumption rose by 0.2% from a flattish Q1 while gross fixed capital formation advanced by 4.6, driven by a 9.2% surge in business investment.
Business investment in Britain increased 4.1% following a revised 4% growth in the first quarter, the Office for National Statistics said Friday.
The final reading was above the flash estimate of a 3.4% gain. On a yearly basis, UK business investment climbed 9.2%, against the prior 7% increase and the flash reading of a 6.7% rise.
In addition, government consumption rebounded by 1.3% after two periods of contraction, and net trade contributed positively to GDP, as exports rose by 3.2%, and imports declined by 2.5%.
Economists polled by the Wall Street Journal also expected on-quarter growth of 0.2% in 2Q.
Industrial production helped drive the increase in the second quarter, the ONS said, with output jumping there by 1.2% in the quarter, revised up from a previously estimated increase of 0.7%.
Q2 GDP data for the U.K. shows that the economy was a little more resilient in the first half of the year than previously thought, although momentum appears to be fading, according to Ruth Gregory, economist at Capital Economics.
The revision of 1Q growth to 0.3% from 0.1% previously now means that GDP is 1.8% above its pre-pandemic level, taking it above France in the G7 rankings. But sources of growth seem unlikely to be sustained, she says.
The high level of recent business investment won’t last, given it was helped by the government’s super-deduction allowance, and the growing drag from higher interest rates means households will struggle to keep increasing their spending at their current rate, Gregory says
