UK GDP grew more than forecast in the 2nd quarter

According to the report from Office for National Statistics, UK gross domestic product (GDP) is estimated to have increased by 5.5% in Quarter 2 (Apr to June) 2021, revised from the first estimate of a 4.8% increase. Economists had expected a 4.8% increase.

The level of GDP is now 3.3% below where it was pre-pandemic at Quarter 4 (Oct to Dec) 2019, revised from the previous estimate of 4.4% below.

In output terms, the largest contributors to this increase were from wholesale and retail trade, accommodation and food service activities, education and human health, and social work activities.

In Quarter 2 2021, there were increases in all main components of expenditure, with the largest contribution from household consumption, which contributed 4.0 percentage points to the 5.5% increase following the easing of coronavirus restrictions in Quarter 2 2021 when compared with those in place in Quarter 1 (Jan to Mar) 2021.

The UK’s net borrowing position with the rest of the world reduced to 1.5% of GDP in Quarter 2 (Apr to Jun) of 2021 compared with 1.7% of GDP in Quarter 1 (Jan to Mar) of 2021.

A rise in household spending of 7.9% saw the household saving ratio decrease to 11.7% in Quarter 2, compared with 18.4% in Quarter 1, which was the second highest on record.

General government decreased its net borrowing position in the non-financial account to £51.3 billion in Quarter 2 2021 (8.9% of GDP) from £73.2 billion in Quarter 1 2021 (13.1% of GDP); lower borrowing was driven by a rise in income from taxes on products and production of 9.1%, a fall in subsidies of 19.7% and a fall in government final consumption expenditure of 3.0%.