UK GDP revised lower in the second quarter

The UK economy grew less than expected in the second quarter, data released on Wednesday showed.

According to the Office for National Statistics (ONS) the economy expanded 0.7% quarter-on-quarter in Q2 as estimated.

However, on a year-on-year basis, GDP was revised lower to 2.4% from the previous estimate of 2.6%, although it marked a considerable improvement from the 0.4% rate recorded in the previous three months.

Quarterly growth in household spending was revised up from 0.7% to 0.8%, boosted by a 2% quarterly rise in households’ real disposable income, while the saving ratio rose from 4% to 4.7%.

While the economic recovery does not look to have maintained a similar pace in the third quarter, with the Markit PMI pointing to a quarterly growth of 0.5%, analysts expect the UK economy to shift through the gears again.

“We expect that the recovery will pick up pace again soon,” said Paul Hollingsworth, UK economist at Capital Economics.

“After all, business and consumer confidence remains strong, credit is cheap and becoming more available, and households are yet to spend all of their windfall from lower energy and food prices.”