According to Standard Chartered’s Christopher Graham, the United Kingdom’s economy demonstrated resilience in the second quarter of the year, with GDP rising by 0.4% quarter-on-quarter. This figure matched the Bloomberg consensus and exceeded Standard Chartered’s own forecast of 0.2% growth, though it was a slowdown from the 0.6% quarter-on-quarter increase recorded in Q1. The main drivers of Q2 growth were private consumption, which rose by 0.3% quarter-on-quarter, and business investment, which increased by 1.7% quarter-on-quarter. In contrast, government spending detracted from growth, declining by 0.3% quarter-on-quarter [1].
Monthly data for June showed a 0.3% month-on-month GDP increase, outperforming the Bloomberg consensus of a 0.1% decline. This growth was attributed entirely to services activity, which rose by 0.4% month-on-month, likely supported by warmer weather and the start of the World Cup. However, industrial production, manufacturing production, and construction output all contracted in June, falling by 0.2%, 0.5%, and 0.1% month-on-month, respectively [1].
Looking ahead, Standard Chartered expects UK economic growth to slow in the second half of the year, forecasting quarter-on-quarter growth of 0.2–0.3% in both Q3 and Q4. The bank has raised its full-year 2026 growth forecast to 1.3%, up from 1.0%, reflecting the resilience seen in Q2 and the momentum in June. However, higher household energy prices, which reset higher at the start of Q3, and elevated inflation are expected to act as headwinds to consumption. Additionally, uncertainty ahead of the budget on 28 October is likely to weigh on business investment [1].
Despite Q2 growth exceeding the Bank of England’s July projection of 0.3% quarter-on-quarter, Standard Chartered believes that inflation and labor market data will be more significant factors in the BoE’s policy decisions. With rates currently restrictive, the bank expects the BoE to keep rates on hold for the remainder of the year [1].
CONCLUSION
The UK economy outperformed expectations in Q2 2024, driven by private consumption and business investment, but faces headwinds from higher energy prices and inflation in the second half. Standard Chartered anticipates slower growth ahead and expects the Bank of England to maintain its current interest rate stance. Market sentiment remains cautiously optimistic, with resilience noted but risks persisting.