The UK economy expanded at a much faster rate than originally expected in 2023, according to revised data from the Office for National Statistics (ONS).
Updated figures show the economy grew by 0.3% last year, three times the previously reported growth of 0.1%.
This upward adjustment comes after collecting more detailed data on wages and company profits. Despite the better-than-expected performance, the UK remained one of the slowest growing economies in the G7, with only Germany performing worse, shrinking by 0.1% over the same period.
The improving economic outlook is likely to draw criticism of the Labor government’s claims that it inherited the worst economic situation from the previous Conservative administration since World War II. However, the ONS also revised GDP growth for the second quarter of 2024 to 0.5%, a slight decline from the previous estimate of 0.6%, highlighting the challenges the economy faces as Sir Keir Starmer takes office in July.
The Organization for Economic Co-operation and Development (OECD) expects the UK economy to grow by 1.1% this year, indicating a modest recovery. Gaura Suri, an economist at PricewaterhouseCoopers, noted that while second-quarter GDP growth was slightly below initial estimates, the broader economic outlook has improved due to lower inflation, lower interest rates, and increased political stability in the wake of the general election. .
Real GDP per capita, considered a better measure of living standards, rose 0.2% in the three months to June, although it was still 0.3% lower than it was during the same period last year. Meanwhile, disposable income rose 1.3% in the second quarter, down from a 1.6% rise in the previous quarter.
Household savings also saw a notable increase, reaching 10% in the second quarter, up from 8.9% in the first quarter, according to the Office for National Statistics.
Liz McKeon, director of economic statistics at the ONS, explained that the revised GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated estimates of industry size. However, she noted that the overall growth trajectory over the past 18 months was largely unchanged.
The Office for National Statistics has previously faced criticism for underestimating the strength of the UK’s post-Covid recovery, and concerns have been raised about the accuracy of labor market data due to low survey response rates.