Key facts
- The UK economy grew 0.4% in July, exceeding economists' forecasts.
- The expansion was boosted by a strong performance from the services sector, especially computer programming and AI-related technologies.
- July's growth follows 0.3% growth in June and 0% growth in May.
- The economy grew 0.4% in the three months to July, compared to the previous three months.
- Higher energy prices and borrowing costs are expected to impact future growth.
The UK's economy grew by 0.4% in July, surpassing economists' expectations of no growth, according to the Office for National Statistics (ONS). This expansion was partly attributed to strong performance in the services sector, particularly in computer programming and AI-related technologies.
July's figure follows growth of 0.3% in June and zero growth in May. The ONS noted that while some businesses benefited from warm weather and the football World Cup, the effects varied across industries. In the three months to July, the economy grew by 0.4% compared to the previous three months.
Experts, including Paul Dales, chief UK economist at Capital Economics, acknowledged the economy's resilience but cautioned that higher energy prices and borrowing costs are likely to slow growth in the coming months. Yael Selfin, chief economist at KPMG, highlighted that the headline growth figure masks a weaker picture for households, with consumer-facing services contracting due to higher energy and fuel prices, and elevated mortgage rates impacting spending.
Richard Carter, head of fixed interest research at Quilter Cheviot, suggested that sustained growth would be difficult to achieve, especially with the upcoming budget. He also noted the ongoing influence of the war in the Middle East on economic data and the UK's exposure to its fallout.