Revised figures show UK growth last year was better than thought

The UK economy grew three times as fast as initially estimated across 2023, researchers from the Office for National Statistics said after they gathered more detailed data on wages and businesses’ profits.
The ONS reported on Monday that output accelerated by 0.3 per cent last year, up from a previous estimate of 0.1 per cent.
Despite the upward revision, the UK was estimated to be the second slowest-growing economy in the G7 in 2023. Only Germany, which contracted by 0.1 per cent, recorded a worse performance.
Better than initially calculated growth is likely to strengthen criticism of the Labour government’s claim that it has inherited the worst economic situation from the Conservatives since the Second World War.
However, the ONS cut its estimate for GDP growth in the second quarter of 2024 to 0.5 per cent from 0.6 per cent, indicating that the economy was weaker as Sir Keir Starmer entered No 10 at the beginning of July.
According to forecasts released by the Organisation for Economic Co-operation and Development (OECD), the UK economy will grow by 1.1 per cent this year.
Gora Suri, an economist at PwC, a consultancy, said: “The UK’s GDP grew by slightly less than originally estimated in the second quarter of this year, but overall the UK economic outlook has improved considerably since the start of the year.
“This is largely the result of inflation being back to target, interest rates starting to come down and greater political stability post-election.”
Real GDP per head, which is seen by experts as a more accurate measure of living standards, was up by 0.2 per cent in the three months to June this year but remained 0.3 per cent lower compared with the same period last year.
Disposable incomes increased by 1.3 per cent in the second quarter, down from an improvement of 1.6 per cent in the previous three months.
The household savings ratio was estimated at 10 per cent in the second quarter, the ONS said, up sharply from 8.9 per cent in the three months to March.
Liz McKeown, director of economic statistics at the ONS, said the “updated GDP figures for 2023 and 2024 include new annual survey data, VAT returns and updated information about the relative size of each industry for the first time. However, after taking on these improvements, the quarterly growth path across the last 18 months is virtually unchanged.”
The ONS has previously come under fire for having overstated the weakness of the UK’s recovery from the Covid-19 pandemic.
Economists have also paid less attention to its monthly labour market data because the underlying survey that it uses has suffered from a sharp drop-off in response rates.