Growth in the UK economy slowed to 0.5% in Q2 from 0.6% in the previous quarter, stoking fears over whether Prime Minister Keir Starmer’s growth targets will be met.
The economy expanded more slowly than expected in the second quarter, a sign that the recovery from recession was already losing steam as Labour came to power.
Gross Domestic Product grew 0.5%, the Office for National Statistics said Monday, compared with a prior estimate of 0.6%. It follows 0.7% growth in the first quarter. Economists expected no revision.
The figures are a blow for Prime Minister Keir Starmer, who is counting on fast growth to help deliver the improvements to public services promised to voters.
Starmer has pledged to lift growth to 2.5%, well above the levels seen since the financial crisis and the rate forecasters expect in the coming years.
The economy will probably slow a little further in the year’s second half,” said Thomas Pugh, an economist at RSM UK.
However, the composition of growth should be healthier, with household consumption and business investment driving growth rather than government spending.
Further indications are that the economy has lost momentum since Labour took office in July, partly because of its warnings about public finances.
Output flatlined in July for the third time in four months, and confidence is weakening amid fears that Chancellor Rachel Reeves will announce tax rises and spending cuts in her budget on Oct.
30 to fill what she claims is a black hole left by the Conservatives. Recent surveys point to the economy’s slow growth of around 0.3% a quarter.
