UK economy slows to 0.4% in second quarter

The UK economy grew 0.4% in the second quarter, slowing from 0.6% at the start of the year, the Office for National Statistics said Thursday.

The ONS said output remained relatively robust despite domestic political unrest and pressure from higher energy costs linked to the US-Iran war.

Services output grew 0.5% in the April-June period and was again the main driver of growth. Construction also expanded, while production was flat.

The quarter ended more strongly than it began. The ONS said gross domestic product grew 0.3% in June after no growth in May and a slight contraction in April. It cited the football World Cup as a reason for higher turnover in June in industries including alcohol manufacturing, wholesale, food and drink services, publishing, television production and advertising.

Britain has also been through a change in political leadership. Keir Starmer resigned as prime minister in late June and was replaced around a month later by Andy Burnham, after Labour was overtaken in opinion polls by Reform UK.

Finance minister John Healey said people were worried about the effect of the Middle East conflict on living costs and that it had added pressure on British businesses.

Stuart Morrison of the British Chambers of Commerce said the headline figures should not hide cost pressures on long-term business growth. He said Healey's first budget, due on October 28, should include measures to boost trade, investment and productivity.

Burnham has focused on easing household costs, with tax on electricity bills set to be removed this winter. The Bank of England has warned that inflation is set to rise as the Middle East war keeps energy prices high.