UK Continues To Bounce Back From Recession - But The Bigger Picture Remains Bleak

16th August 2024

The UK economy has continued to bounce back from last year's recession in 2024 with the fastest growth of any G7 economy in the first six months of the year. But its record on GDP-per-capita, which matters more for living standards is far less impressive, the Resolution Foundation said on Thursday 15 August 2024 in response to the latest ONS GDP data.

GDP grew by 0.6 per cent in the second quarter of 2024, driven by the UK’s powerhouse services sector, and professional science and technology services (which grew by 2.5 per cent) in particular.

This is the second strongest quarterly growth of any G7 economy (after the US at 0.7 per cent), while UK growth across 2024 so far is, at 1.3 per cent, the strongest (ahead of the US at 1.1 per cent).

However, the UK’s medium-term record on growth is far less impressive - highlighting the scale of the challenge facing the new government.

The UK’s record on growth since the eve of the pandemic (Q4 2019) is the second worst in the G7 (2.4 per cent, higher only than Germany’s 0.2 per cent). And when accounting for the UK’s rapid population growth in recent years, driven by historically high levels of migration, GDP-per-capita is actually lower today (by 0.4 per cent) than it was on the eve of the pandemic. Even in the latest data (Q2 2024), GDP-per-capita grew by a far more modest 0.3 per cent.

Simon Pittaway, Senior Economist at the Resolution Foundation, said, "The UK economy has continued to bounce back from its recession last year, and has recorded the strongest growth of any G7 economy over the past six months.

“But that’s where the good news ends. Britain’s medium-term record is far less impressive, and has been driven by a growing population rather than rising productivity.

“Without a return to productivity growth, living standards will continue to stagnate and Britain will continue to fall behind its peers."