Revised figures from the ONS indicate a significant improvement in the UK’s economic growth for 2023, yet challenges persist.
- The UK economy expanded by 0.3% over the past year, notably higher than earlier estimates of 0.1%.
- Despite this growth, the UK remains one of the slower-growing economies within the G7, with Germany experiencing a contraction.
- GDP growth for the second quarter of 2024 was revised down to 0.5%, highlighting ongoing economic challenges.
- The OECD projects a modest economic recovery for the UK, with a growth rate of 1.1% expected for this year.
Revised economic data from the Office for National Statistics (ONS) reveal that the UK economy expanded by 0.3% in the past year, a figure that is three times higher than earlier reports of 0.1% growth. This adjustment comes after a thorough analysis of more detailed information regarding wages and corporate profits. The revised figures suggest a better-than-anticipated economic performance, although the UK’s growth remains one of the slowest in the G7 group of nations. Only Germany displayed weaker performance, contracting by 0.1% over the same period.
While these revisions may bolster critiques of the Labour government’s narrative, which claims they inherited a challenging economic situation, they also underscore existing challenges. The ONS announced a downward revision of GDP growth for the second quarter of 2024, reducing it from 0.6% to 0.5%. This dip occurs as Sir Keir Starmer commenced his leadership, amidst a landscape of economic uncertainty.
In its forecast, the Organisation for Economic Co-operation and Development (OECD) predicted a growth rate of 1.1% for the UK this year, reflecting a cautious yet positive economic recovery. Economist Gora Suri from PwC commented that even though the revised second-quarter GDP growth was slightly below initial expectations, overall economic prospects are improving due to reduced inflation, falling interest rates, and enhanced political stability following the recent general election.
An analysis of real GDP per head offers a more comprehensive understanding of living standards. This measure indicates a rise of 0.2% in the three months leading to June, despite being 0.3% lower than the prior year’s equivalent period. Moreover, disposable incomes grew by 1.3% in the second quarter, albeit down from the previous quarter’s increase of 1.6%. Another noteworthy development is the household savings ratio, which climbed to 10% in the second quarter from 8.9% in the first quarter.
Liz McKeown, the Director of Economic Statistics at the ONS, clarified that the revised GDP figures for 2023 and 2024 integrate new annual survey data, VAT returns, and updated industry size estimates. She noted that despite these updates, the overall growth trajectory remained largely unchanged. The ONS has previously faced scrutiny over its post-Covid recovery assessments, with concerns about the accuracy of its labour market data due to declining survey response rates.
The UK’s revised economic growth figures for 2023 show improvement, although significant challenges continue to persist within the economy.
