Key facts
- UK household incomes grew 1.1% between January and June.
- UK GDP grew 0.5% in the April-June quarter.
- Business investment increased 1.8% in the second quarter.
- The UK savings rate increased to 8.8% in the three months to June.
- Sterling reached a six-week high against the euro.
- Two-year UK bond yields fell to 4.86%.
UK household incomes grew at a faster pace than previously estimated in the first half of the year, according to revisions of official data from the Office for National Statistics (ONS). Income per head rose 1.1% between January and June, supported by stronger economic growth.
The ONS reported that gross domestic product (GDP) increased by 0.5% in the April to June quarter, an upward revision from the previously estimated 0.4%. This indicates the UK economy grew at the same pace as the US in the first six months of the year, following 0.6% growth in the first quarter.
Business investment also showed strength, rising 1.8% in the second quarter and marking a 5.2% increase compared to the same quarter a year ago. Households increased their savings rate to 8.8% in the three months to the end of June, up from 8.6% in the previous quarter.
Analysts suggested that increased confidence, potentially linked to political developments, may have contributed to the economic resilience. The positive economic data has been seen as a boost for Chancellor John Healey ahead of his upcoming budget.
Currency markets reacted positively, with sterling reaching a six-week high against the euro and edging higher against the US dollar. Traders speculated that the robust growth figures might lead the Bank of England to maintain higher interest rates, given that inflation remains above the central bank's 2% target at 3.1%.
UK government bond yields eased following the economic data and lower global oil prices. Two-year UK bond yields decreased by 0.05 percentage points to 4.86%, while 10-year yields were four basis points lower at 5.356% on Wednesday.