The UK's economy grew by 0.6% between April and June, continuing its recovery from the recession at the end of last year. This growth aligns with forecasts and follows a 0.7% increase in the first three months of this year.
Growth was driven by the services sector, particularly the IT industry, legal services, and scientific research. Services are the largest contributor to the UK's economy, far surpassing manufacturing and construction, both of which saw output decline between April and June.
"The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year,” said Liz McKeown, director of economic statistics at the Office for National Statistics, which released the figures.
Last year, the UK economy experienced a shallow and short-lived recession, defined as two consecutive quarters of shrinking economic activity. While gross domestic product (GDP) expanded over the latest quarter, growth was flat in June.
Although the services sector supported economic expansion over the three months, it hindered performance in June alone. Strike action by junior doctors impacted growth, with NHS England reporting 61,989 canceled appointments due to industrial action between 27 June and 2 July.
Economists also warned that growth might slow in the second half of 2024.
Impact on Small and Medium Enterprises (SMEs)
The recovery and growth of the UK's economy have significant implications for small and medium enterprises (SMEs). A growing economy can lead to increased consumer confidence and spending, which benefits SMEs in various sectors. The strong performance of the services sector, particularly in IT and legal services, can provide SMEs with more business opportunities and partnerships.
However, the decline in manufacturing and construction output may pose challenges for SMEs operating in these industries. These businesses might need to adapt by exploring new markets or diversifying their offerings to mitigate the impact of sector-specific downturns.
Additionally, potential economic slowdown in the latter half of 2024 could affect SMEs' growth prospects. SMEs should prepare for potential challenges by maintaining robust financial practices, exploring new revenue streams, and staying agile to adapt to changing economic conditions.