Updated UK economic growth figures for 2023 show significant improvement, but challenges remain
The UK economy expanded at a much faster pace than originally thought in 2023, according to updated data from the Office for National Statistics (ONS).
Updated figures show the economy grew by 0.3% last year, triple the reported 0.1% growth.
This upward revision follows the collection of more detailed data on earnings and business profits. Despite the better-than-expected performance, the UK remains one of the slowest growing economies in the G7, with only Germany faring worse by contracting 0.1% over the same period.
The improved economic climate is likely to fuel criticism of the Labor government’s claims of inheriting the worst economic climate from the previous Conservative government since World War II. However, the ONS revised down GDP growth for the second quarter of 2024 to 0.5%, down slightly from the previous estimate of 0.6%, highlighting economic challenges as Sir Keir Starmer takes office in July.
The Organization for Economic Co-operation and Development (OECD) predicts that the UK economy will grow by 1.1% this year, indicating a slight recovery. Gora Suri, an economist at PwC, noted that although second-quarter GDP growth was slightly below initial estimates, the broader economic outlook improved due to lower inflation, lower interest rates, and increased political stability after the general election.
Real GDP per head, considered a better measure of living standards, rose 0.2% in the three months to June, although it remains 0.3% lower than the same period last year. Meanwhile, disposable income increased 1.3% in the second quarter, down from 1.6% in the previous quarter.
The housing savings rate also increased significantly, reaching 10% in the second quarter, from 8.9% in the first quarter, according to the ONS.
Liz McKeown, Director of Economic Statistics at the ONS, explained that the revised GDP figures for 2023 and 2024 include annual survey data, VAT returns, and revised sector size estimates. However, he noted that the overall growth trajectory over the past 18 months has not changed.
The ONS has faced criticism in the past for underestimating the UK’s ability to recover after Covid, and concerns have been raised about the accuracy of labor market data due to declining survey response rates.
