After two months of contraction, the UK economy is showing signs of returning to growth. According to recent data released by the Office for National Statistics (ONS), the UK economy grew by 0.1% in July, following a 0.2% contraction in both May and June.
This modest growth is a welcome relief for the UK economy, which has been facing headwinds from ongoing Brexit uncertainty, global trade tensions, and a slowdown in the global economy. The return to growth in July was driven by a strong performance in the services sector, which accounts for around 80% of the UK economy.
The services sector grew by 0.3% in July, with strong performances in retail, accommodation, and food services. This is a positive sign for the UK economy, as consumer spending has been a key driver of growth in recent years. The manufacturing sector also showed signs of improvement, growing by 0.2% in July.
Despite the return to growth in July, the UK economy still faces challenges ahead. Brexit uncertainty continues to weigh on business investment and consumer confidence, and the global economic outlook remains uncertain. The ongoing trade tensions between the US and China are also a cause for concern, as they could impact global trade and economic growth.
However, there are some positive signs for the UK economy. The unemployment rate remains low, at 3.8%, and wage growth is outpacing inflation, giving consumers more spending power. The Bank of England has also hinted at a possible interest rate cut in the near future, which could provide a further boost to the economy.
Overall, the return to growth in July is a positive development for the UK economy, but challenges remain. It will be important for policymakers to continue to support the economy and address the underlying issues that are holding back growth. With the right policies in place, the UK economy has the potential to continue its recovery and build momentum in the months ahead.