UK economy revised slightly higher after strong Q2 growth

The UK economy grew slightly more than previously estimated in the second quarter of the year, according to revised figures, in a development analysts described as a modest boost for the government even though it took office only shortly before the period ended.

Gross domestic product for the April-to-June period was revised up to 0.5% quarter-on-quarter growth, from an initial estimate of 0.4%. The revision followed unrevised growth of 0.6% in the first quarter, according to official data.

Analysts said the figures suggest the economy has so far proven more resilient to higher energy prices than previously thought, although several cautioned that this resilience may not persist into the final quarter of the year, when higher inflation is expected to weigh more heavily on household incomes. One market analyst noted that growth in the first half of the year was the strongest among G7 economies.

The data also showed that government spending contracted by 0.5% quarter-on-quarter in the second quarter, a steeper decline than the previously reported 0.3% contraction, indicating that growth was less dependent on public spending than earlier estimates suggested.

Separately, bakery chain Greggs said it plans to cut around 740 jobs as part of a restructuring, even as the company reported accelerating sales growth of 7.7% in the third quarter, which it attributed in part to more settled weather and ongoing changes to its menu.

Analysts said the coming months could prove more difficult for the UK economy, citing the possibility of interest rate rises, rising inflation and a tax-raising budget as headwinds likely to weigh on growth through the winter.