UK growth revised up to 0.5%: What drove the stronger figures?

In the second quarter, Britain's economy grew at a rate of 0.5%, revised upward from the initially reported 0.4%, according to data released by the Office for National Statistics (ONS). This growth was slightly slower than the 0.6% expansion seen in the first quarter. The increase was primarily attributed to stronger performance in professional, scientific, and technical services, which expanded by 0.6% following updated business survey data.

Other notable contributors to services growth included advertising, scientific research, legal services, and computer programming. Construction also saw an expansion of 0.8%, while production output declined by 0.1%.

The revision in GDP growth means the economy is now marginally larger than previously estimated, as stated by ONS director of economic statistics Liz McKeown. Real household disposable income per head rose by 1.0%, following a previous quarter decrease of 0.8%. However, growth remains challenging due to high borrowing costs, inflationary pressures, and a weakening labor market, as noted by Richard Carter, head of fixed interest research at Quilter Cheviot.

The economic outlook has become more uncertain since the second quarter, with recent surges in energy prices and borrowing costs.

Chancellor John Healey, who will present the annual budget on October 28th, has committed to maintaining strict fiscal discipline. Carter warned that tax rises or similar measures in the budget could undermine the emerging positive economic trends. The Budget would be the first real test for Chancellor Healey to balance fiscal discipline with the need to support growth, as markets will be seeking a credible plan and are unlikely to trust the government without it.