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UK economy up 0.2% as drinks and hospitality grow
The UK economy has grown by 0.2%, slightly outstripping expectations, as the drinks and hospitality sector benefited from good weather.
Gross domestic product (GDP) grew by 0.5% in June alone, offset against the decline in May, as a result of the extra bank holiday to celebrate the King’s coronation.
There was increased output from accommodation and food services, which grew 1.5% in June 2023, following a fall of 1.5% in May 2023. The largest contributor was food and beverage services, which grew by 1.4%, with “anecdotal evidence” from the ONS’s monthly business survey that suggested good weather and an increase in live events boosted turnover for business in June, impacting the sector positively.
But even output in consumer-facing services growing by 0.5% in June 2023, including hospitality, the sectors remain below pre-coronavirus (COVID-19) pandemic levels.
Overall, since the start of the pandemic, the ONS said the largest positive contributor within consumer-facing services was food and beverage sectors, which have grown by 10.4% between February 2020 and June 2023.
But the news comes against growing concern for the UK outlook with five years of potential lost economic growth, and the cost of living crisis hitting energy and food costs now likely to continue into 2024, according to economists.
The drinks sector has also seen a new alcohol duty regime come into effect this month, and also been hard-hit by the costs of energy and production, which have seen a large number of breweries close.
Speaking on the latest set of data, Chancellor Jeremy Hunt said: “The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.
“The Bank of England are now forecasting that we will avoid recession, and if we stick to our plan to help people into work and boost business investment, the IMF have said over the longer-term we will grow faster than Germany, France and Italy.”
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