The UK economy grew much faster in 2023 than originally expected, according to revised data from the Office for National Statistics (ONS).
The updated figures show that the economy grew by 0.3% last year, tripling the previously reported growth of 0.1%.
This upward revision follows the collection of more detailed data on wages and corporate profits. Despite its better-than-expected performance, Britain remained one of the slowest growing economies in the G7, with only Germany faring worse with a contraction of 0.1% over the same period.
The improved economic outlook is likely to fuel criticism of the Labor government’s claims that it has inherited the worst economic situation from the previous Conservative government since the Second World War. However, the ONS has also revised downwards GDP growth for the second quarter of 2024 to 0.5%, down slightly from the previous estimate of 0.6%, highlighting the challenges facing the economy as Sir Keir Starmer came to power in July.
The Organization for Economic Co-operation and Development (OECD) predicts the UK economy will grow by 1.1% this year, pointing to a modest recovery. Gora Suri, economist at PwC, noted that while GDP growth in the second quarter was slightly below initial estimates, the broader economic outlook has improved due to lower inflation, falling interest rates and increased political stability following the general election.
Real GDP per capita, considered a better measure of living standards, rose 0.2% in the three months to June, although it is still 0.3% lower than the same period last year . Meanwhile, disposable incomes rose 1.3% in the second quarter, compared to a 1.6% increase in the previous quarter.
Household savings rates also showed a notable increase, from 8.9% in the first quarter to 10% in the second quarter, the ONS said.
Liz McKeown, director of economic statistics at the ONS, explained that the revised GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated estimates of the size of the sector. However, she noted that the overall growth trajectory over the past eighteen months remains largely unchanged.
The ONS has previously faced criticism for underestimating the strength of the UK’s post-Covid recovery, and concerns have been raised about the accuracy of labor market data due to a drop in survey responses.