Researchers from the Office for National Statistics reported that after gathering more detailed data about wages and business profits, the UK economy will grow three times faster than initially predicted by 2023. ONS announced on Monday that the output increased by 0.3 percent last year. This is up from an earlier estimate of 0.1 percent.
The UK is expected to have the second-slowest growth rate in the G7 by 2023, despite the upward revision. Only Germany recorded a lower performance, with a contraction of 0.1 percent. A better than expected growth will likely strengthen the criticism of Labour’s claim to have inherited from the Conservatives the worst economic condition since the Second World War.
The ONS, however, cut its estimate of GDP growth for the second quarter 2024 from 0.6 to 0.5 percent, showing that the economy is weaker since Sir Keir entered the No. 10 position at the start of July. The Organisation for Economic Co-operation and Development’s (OECD) forecasts predict that the UK economy will increase by 1.1 percent this year.
Gora Suri is an economist with PwC. She said, “The UK economy has seen a significant improvement since the beginning of the year.” This is due to the fact that inflation has returned to its target level, interest rates are starting to fall and there’s been a greater degree of political stability since the election.
Experts believe that the real GDP per person, a better measure of living standard, increased by 0.2% in the three-month period ending June, but was still 0.3 percent lower than the same time last year. The second quarter saw a decrease in disposable incomes of 1.3%, compared to 1.6 percent in the first three months.
ONS reported that the household saving ratio had increased to 10 percent in the second quarter from the 8.9 percent in the three-month period ending March. Liz McKeown is the director of economic statistics for the ONS. She said that the “updated figures of GDP for 2023-2024 include new data from the annual survey, updated VAT returns, and for the first-time, updated information on the relative size of every industry.” After these improvements are made, however, the growth trajectory of the quarters over the past 18 months remains virtually unchanged.
The ONS was previously criticized for having overstated the weak recovery of the UK from the Covid-19 Pandemic.
The monthly data on the labour market has also been less regarded by economists, as its underlying survey has seen a steep drop in response rates.
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