Gross domestic product (GDP) in the UK has increased by 0.9% year-on-year in the second quarter of the year, the Office for National Statistics (ONS) has revealed.

Quarter-on-quarter, GDP grew by 0.6% between April and June, having increased by 0.7% between January and March.

Head of financial analysis at AJ Bell, Danni Hewson, said that the UK has "kept its foot on the accelerator" as it looks to move away from last year’s recession, with the latest quarter’s data beating the majority of the G7, excluding the US.

Hewson added: "Household consumption was up as people have got a few more pennies in their pockets thanks to falling inflation and strong wage growth. That extra cash sloshing around has provided the fuel for the kind of growth that’s been lacking for the past couple of years when the economy seemed to flatline following its post-COVID recovery.

"But it’s not all good news and June looked distinctly limp as election uncertainty put off some spending decisions by business, whilst the impact of strike action continued to exert pressure on the economy. The weather also played a part with retail sales suffering as summer seemed to go missing for much of the month."

In output terms, the services sector grew by 0.8% in the quarter, with "widespread growth" across the sector.

This offset drops of 0.1% in both the production and construction sectors.

In the services sector, the professional, scientific and technical activities subsector was the largest contributor, increasing by 2.5%, while the information and communication subsector increased by 1.7% in Q2.

Production fell by 0.1%, following growth of 0.6% in the first quarter, with manufacturing being the largest negative contributor, falling by 0.6% quarter-on-quarter.

Nine of the 13 manufacturing sub-sectors also saw declines in growth in this period.

Construction output dropped by 0.1%, which is the third consecutive quarterly fall, despite growth in May and June 2024.

The ONS added that the fall in construction in Q2 reflects a decline in new work of 0.5%, which has also fallen for the sixth consecutive quarter. However, repair and maintenance has increased for the eleventh consecutive quarter, increasing by 0.4% in Q2.

Head of equity funds at Hargreaves Lansdown, Steve Clayton, said that although there was an overall increase in GDP, this adds a problem to the Bank of England’s base rate.

Clayton added: "This comes hot on the heels of stronger than expected employment data and a weaker than forecast inflation print in recent days. Services inflation dropped far more than expected last month. That’s happy reading for Prime Minister Starmer, but just highlights the Bank of England’s dilemma.

"Growth is stronger than expected, suggesting the economy may not need rate cuts, but inflation is below trend, suggesting that cuts pose limited risks."

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