World Cup and heatwave underpin GDP

The UK economy grew more strongly than predicted in July as the summer heatwave and World Cup tournament provided a welcome lift.

The Office for National Statistics (ONS) said the economy expanded by 0.3 per cent in July, and by 0.6 per cent on a three-month basis. Both readings were ahead of economists’ expectations for a 0.1 per cent and 0.5 per cent rise, respectively.

Economic growth was bolstered in part by the dominant services sector, which grew 0.3 per cent month-on-month thanks to activity in the professional, scientific and technical industries.

On a three-month basis, the services sector grew by 0.6 per cent on the back of a rise in retail and wholesale trading, bolstered by growth in food sales during the World Cup and hot weather.

The ONS’S head of GDP, Rob Kent-smith, said: “Growth in the economy picked up in the three months to July. However, production fell back, with manufacturing again slipping a little while energy generation and supply fell due to reduced demand.”

Despite the robust figures, economists do not expect any further increases in interest rates until after the UK leaves the EU in March.

Alastair Neame, senior economist at the Centre for Economics and Business Research, said: “Headline GDP growth rate is flattered by a comparison to the start of the year which was heavily affected by the poor weather. The current strength of the retail sector in particular looks vulnerable in the face of persistently weak wage growth.” 0 Alastair Neame: headline growth rate has ‘flattered’