THE UK economy grew in July, official figures show, easing worries of a fall into recession in the current quarter, but experts flagged continuing dangers amid Brexit fears.
Data published yesterday by the Office for National Statistics showed UK gross domestic product grew by 0.3 per cent month-on-month in July. Comparing the May to July period with the preceding three months, the UK economy stagnated.
READ MORE: Ian McConnell: No escape from Johnson’s dire Brexit farce in Paris metro and airport
ONS figures last month showed UK GDP fell by 0.2% in the second quarter and a raft of weak economic surveys have signalled a danger of the economy falling into recession in the three months to September.
Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “GDP growth of 0.3% month-on-month in July looks to go a long way towards guaranteeing that the economy will return to growth in the third quarter. But disappointing survey evidence for August relating to manufacturing, construction and services activity as well as retail sales suggests that the economy is currently finding life challenging as it is hampered by serious uncertainties relating to Brexit, the domestic political situation and the global economy.”
The EY ITEM Club forecasts third-quarter UK growth of 0.3%. It projects 1.2% expansion over 2019 as a whole, which would be the UK’s weakest performance since 2009.
READ MORE: Ian McConnell: We must cling on to hope of Brexit slipping through Johnson’s fingers
Mr Archer said that, should the UK leave the European Union without a deal on October 31, the think-tank believed GDP growth would be likely to come in at just 0.3% in 2020, “with the economy at risk of suffering stagnation or even mild recession over the first half”.
The National Institute of Economic and Social Research projected third-quarter UK economic growth of 0.3%, in the wake of yesterday’s monthly GDP figures.
Garry Young, director of macroeconomic modelling and forecasting at the NIESR, said: “It looks like there has been a welcome resumption of economic growth in the third quarter, roughly offsetting the fall in the second quarter. But it is not clear how long growth will continue."
READ MORE: Ian McConnell: Very British bravado on Brexit from Johnson fuels fears for UK future
He added: “Only the services sector is expanding, primarily to meet higher demand from consumers driven by increased household incomes fuelled by rising real wages.
"But there is a limit to how much further real wages can grow without a pick-up in investment and productivity, and this seems unlikely in the near term.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here