UK Economy Sees Positive Growth Amid Recovery Efforts

Britain's economy showed signs of recovery with a 0.6% GDP growth between April and June, following a 0.7% increase in the first quarter. Despite growth led by the service sector, weaknesses in retail and TV production persist. Economists are divided on future growth prospects.

Britain's economy continued its recovery from recession at the end of last year, with its GDP increasing by 0.6 per cent between April and June, official figures showed on Thursday.

The second-quarter growth in economic activity, as measured by gross domestic product, followed a 0.7 per cent increase in the first quarter and was in line with economists' predictions. It was a welcome boost for the UK's new Labour government, which has pledged to rebuild Britain's economy after years of sluggish growth.

"The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year," said Liz McKeown, director of economic statistics at the Office for National Statistics.

Growth was led by the service sector, in particular in technology, scientific research and legal services, the figures showed.

That partly offset some weaknesses in retail and lower output in the TV and film production industry, where the Screen Actors Guild strikes in the US in 2023 are still affecting UK production schedules.

The UK economy fell into recession at the end of 2023 as GDP contracted by 0.3 per cent in the final three months last year. Figures at the time showed that all three main sectors — services, industrial production and construction — were down.

Rachel Reeves, Britain's new Treasury chief, pledged last month to prioritise stimulating economic growth and reversing what she called "14 years of chaos and economic instability" under previous Conservative governments.

Some economists warned that growth could slow in coming months. GDP growth in the month of June was flat, with the service industry contracting by 0.1 per cent.

Others, including Peter Arnold, chief economist at Ernst and Young UK, were more optimistic.

"EY expects the economy to continue growing at a decent pace, though it will struggle to sustain the above-trend rates seen in H1 (the first half of) 2024," he said.

(With inputs from agencies.)