UK economy grows but experts warn of challenging months ahead

An added boost from summer sun and sports fixtures for some businesses helped the UK economy to grow by 0.4% between April and June, according to official data.

But the figure - in line with economists' expectations - is below the 0.6% expansion recorded in the first three months of this year.

The Office for National Statistics (ONS) said growth had "remained relatively robust", with services sector propelling growth in the second quarter while manufacturing also grew.

Computer programming, advertising and the pharmaceutical industry were areas of strength, the ONS said. That was offset by falls in power generation and sewerage.

The ONS said some businesses reported that "good weather and sporting events may have had a positive effect" in June, boosting month-on-month growth to 0.3% in June. However, May's growth was revised down from 0.1% to zero growth.

The men's football World Cup, which kicked off mid-June, boosted customers at hospitality venues showing the matches.

June also saw several of summer's heatwaves.

The slowdown in growth over the three months to the end of June compared to the start of the year reflected the ongoing impact of the war in Iran as well as political uncertainty in the run up to Sir Keir Starmer's resignation as prime minister at the end of June.

Chancellor of the Exchequer, John Healey MP said: "I know people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses."

He said the government's aim was to make the country "more resilient" and to "drive growth in every postcode".

Shadow chancellor Sir Mel Stride said Labour had "mismanaged the economy with their tax and borrowing spree, leaving it weak and vulnerable to the effects of shocks like the Iran War.

"Labour need to realise that it's their poor decisions which have stifled growth and made the cost of living worse," he said.

Fergus Jimenez-England, Associate Economist National Institute of Economic and Social Research said the UK economy had "weathered the recent energy shock better than many feared", but said the recent pace of growth was unlikely to be sustained.

"Both inflation and unemployment are set to rise in the coming months while business sentiment remains fragile and could dampen further with ongoing energy price volatility.

"The economy has shown welcome resilience so far, but we are not out of the woods yet."

Suren Thiru, ICAEW Chief Economist, said households and firms had "largely shrugged off the shockwaves from the Iran war"

But he also expected weaker growth in the second half of the year, making the chancellor's budeget in October "more challenging".

Yael Selfin, Chief Economist at KPMG said economy had remained "resilient in the first half of the year but that momentum was likely to fade in the second half of the year."