“The UK economy remained resilient in the first half of the year despite higher energy prices and increased geopolitical uncertainty. While these headwinds weighed on confidence, stronger-than-expected activity among households and businesses helped sustain growth through the second quarter.
“Consumers have faced a series of shocks since the start of the year but have weathered them remarkably well. A spell of above average temperatures provided an additional boost, encouraging spending across a range of consumer-facing sectors. However, these temporary tailwinds are likely to fade, and higher prices continue to squeeze households’ purchasing power. With wage growth also set to slow further, household spending is likely to face greater pressure over the coming months.
“UK GDP grew by 0.4% in the second quarter, driven by technology adoption, marketing activities and research and development, which can bode well for future growth. Growth is expected to moderate in the coming months as the impact of higher prices and borrowing costs filter through to households and businesses.
"As we move closer to the Autumn, attention will turn to any potential changes in fiscal policy in the forthcoming Budget. Any prolonged period of speculation around fiscal policy could cause firms to delay investment decisions and households to take a more cautious approach to spending. Early clarity on the policy direction will help minimise the risk of any potential adverse impacts on activity.”
