- Revised figures from the Office for National Statistics (ONS) showed UK GDP grew by 0.5% between April and June this year – up from the 0.4% previously reported
- Business-facing service sector helped lift the economy as companies invested in AI
- Non-pension household savings increased ahead of changes to Cash ISA limits
Danni Hewson, AJ Bell head of financial analysis, comments on revised ONS Q2 GDP figures:
“Good news about the resilience of the UK economy will help reinforce the ‘good vibes’ this government is keen to instil, but there’s no doubt that all of us, especially the chancellor, have one eye on the horizon.
“There are plenty of menacing dark clouds hinting at more pain for household budgets – pain which the Treasury has little scope to prevent.
“Households are already taking action to try and pad out emergency funds, though the increased household savings also come ahead of changes to Cash ISA limits in April next year. This will have prompted some people to ensure they make the most of current allowances.
“Additional growth in the service sector seems to have come courtesy of the rush by businesses to increase their AI capabilities. It is hoped these moves can help companies increase productivity levels and further bolster the country’s economy.
“But whilst it’s important to celebrate the resilience of the UK economy despite the headwinds of global instability, there’s no getting away from rising prices. This is already evident at the petrol pump and energy bills look set to increase at the exact moment when people will need to use more power.
“Whilst MPC members have sought to reassure the public that interest rate hikes are not nailed on, financial markets are broadly pricing in a November hike and the possibility of a second quarter-point increase before the end of the year.
“Good vibes can lift confidence, but they can’t keep people warm.”
