LONDON: Britain’s economy expanded slightly over the second quarter thanks to strong output in June and despite inflation remaining high, official data showed Friday. Gross domestic product grew 0.2 percent in the April to June period after output expanded 0.1 percent in the first quarter, the Office for National Statistics (ONS) said in a statement.

“Across the quarter as a whole, GDP grew a little with widespread growth across manufacturing, aided by falling raw material prices,” said Darren Morgan, director of economic statistics at the ONS. The economy grew by a stronger-than-expected 0.5 percent in June, sending the pound higher against the dollar in early London trading.

Government boost

The data was a boost also for the Conservative government, forecast to lose power in a general election due next year as Britain struggles with a cost-of-living crisis. “The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy,” finance minister Jeremy Hunt said in reaction to the GDP figures.

“If we stick to our plan to help people into work and boost business investment, the IMF has said over the longer-term we will grow faster than Germany, France and Italy,” he added. The growth update came one day after British household goods company Wilko collapsed owing to big debts, putting about 12,500 jobs at risk as high inflation and interest rates hurt consumers and businesses.

Prime Minister Rishi Sunak has made it a government priority to get UK annual inflation down to five percent by the end of 2023, around half the rate it was at the start of the year. This will largely be down to outside factors, however, notably the independent Bank of England (BoE) raising interest rates and price growth slowing for food and energy. UK annual inflation currently stands at 7.9 percent, the highest among G7 nations. Despite Friday’s bright data, economists said the UK remained at risk of recession this year, especially as the growth numbers could see the BoE keep on raising interest rates. June’s output rise “was mostly due to the return to the normal number of working days” in the month after a public holiday in May for the coronation of King Charles III, noted Ruth Gregory, deputy chief UK economist at Capital Economics.

“We still think that with most of the drag from higher interest rates still to come, GDP will fall in the third quarter and a mild recession will begin,” she added. Output in June was lifted especially by strong manufacturing and construction growth, the ONS added, amid dry and warm weather that month that preceded the rain in July and at the start of August. — AFP