UK GDP GROWS 0.4% AS COST PRESSURES PERSIST

What's happened

GDP has risen 0.4% in the three months to June, driven by services amid hot weather and the World Cup. Growth remains challenged by energy costs and Middle East turmoil, with Treasury modelling warning of subdued expansion next year. The data comes as ministers outline plans to shield households and business from a difficult outlook.

What's behind the headline?

Analysis

• The numbers show resilience in services despite headwinds from energy costs and geopolitical tensions. This will likely shape the upcoming budget as ministers balance support for households with fiscal discipline.
• The data emphasises a divergence: services activity is buoyant while production and construction lag, underscoring a sectoral shift in the economy.
• The visit of the Prime Minister and Chancellor to briefing sessions may signal that the government is intent on presenting a united, proactive response to cost pressures, aiming to reassure businesses that growth remains attainable despite global risks.
• Forecasts suggest that without a permanent peace deal in the Middle East, GDP growth could slow further next year, keeping inflation pressures and energy costs in focus for policy action.

How we got here

Policy makers have long warned that energy prices and global tensions could slow growth. The ONS data arrives amid ongoing concern over the Middle East conflict and its impact on energy prices, which are shaping the government's economic strategy.

Our analysis

- The Mirror reports GDP at 0.4% growth in Q2, highlighting weather, World Cup effects, and energy-price concerns. - The Independent corroborates 0.4% growth and notes service-sector strength alongside heatwave impacts. - Reuters summarises May revision to 0.3% and a Q2 rise led by services, while flagging political uncertainty and fiscal responses. - The Guardian adds context on energy prices and upcoming budget considerations, including potential household support.

Go deeper

• What concrete measures will the government announce to shield households from energy costs this winter?
• How might the Middle East conflict shape Britain's growth trajectory over the next 12 months?
• Which sectors are most at risk if energy prices stay elevated?

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