Q2 GDP growth remains 'lacklustre' at 0.3%

This is a slight increase from Q1, when preliminary estimates recorded growth at 0.3% which was later revised down to 0.2%.

The growth in Q2 was driven by services, which grew by 0.5% compared with 0.1% growth in Q1.

The largest contributors to growth in services were retail trade, which improved after a fall in the first quarter, and film production and distribution.

Construction and manufacturing were the largest downward pulls on quarterly GDP growth, following 2 consecutive quarters of growth.

Ben Brettell, Senior Economist at Hargreaves Lansdown, commented: "Despite lacklustre growth so far this year, there are tentative signs that things might improve in the second half.

"Last week saw news that retail sales rose ahead of expectations, indicating the consumer may still have some petrol in the tank – though the Bank of England has expressed caution over rising levels of personal debt. Meanwhile inflation began to recede, which if it continues in the coming months could end the squeeze on real incomes.

"Yesterday a CBI survey showed UK factories increasing output at the fastest rate since the mid-1990s, suggesting manufacturing  - which makes up around ten percent of the economy - might make a meaningful contribution to overall economic growth in the third and fourth quarters.

"As ever it’s worth noting that initial GDP estimates can usually be taken with a pinch of salt, as they are based on less than half of the data which will ultimately be available, and are therefore subject to revision in the coming months."

Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management, added: “The UK’s economy is a long-way from grinding to a halt, but growth is clearly becoming harder to come by. The lack of real-terms wage inflation also continues to drag, as does low productivity. What’s more, companies still do not have clarity on the nature of Brexit, which is impeding long-term investment decisions.
 
"Without significant economic momentum, it’s difficult to see an interest rate rise on the immediate horizon. However, at the same time, consumer credit levels are clearly causing a headache for Mark Carney. We may see some macro prudential action to tackle this, although this in turn may inhibit consumer spending, which has been so instrumental in recent economic growth."