UK Economy Grows 0.6% in Q2, Fueling Expectations of Interest Rate Cut

The UK economy expanded by 0.6% in the second quarter of 2024, slightly slower than the previous quarter's 0.7% growth. The services sector led the growth, but weak performance in health, retail, and wholesale sectors resulted in zero growth in June.

Inflation fell from highs but remains above the Bank of England's target. Unemployment dropped to 4.2%, while wage growth reached its lowest level in almost 2 years.

Analysts predict that the central bank will continue cutting interest rates in the coming months. The new Labour government faces a £22 billion public finance hole and plans to boost the economy through house-building and renewable energy.

The finance minister warns of likely tax rises in her maiden budget later this year. The strong growth in the UK economy so far in 2024 presents challenges for Chancellor Reeves' budget plans, as it raises questions about the need for austerity measures.

It remains to be seen how the economy will perform in the second half of the year.