LONDON, Sept. 11 (Xinhua) -- Britain's economy expanded both in July and the May-July period, with momentum mainly drawing from the services sector. Nevertheless, in the run-up to the Autumn Budget, analysts have warned of the pressure of costs for both households and businesses.
The country's monthly real gross domestic product (GDP) rose 0.4 percent in July, with all three major industrial sectors recording mild growth, data from the Office for National Statistics (ONS) showed Friday.
The figure followed 0.3 percent growth in June, and no growth in May, according to the ONS.
In July, the services industry reported a 0.4 percent increase, and the production and construction industries recorded 0.2 percent and 0.1 percent increases, respectively.
In the three months to July, Britain's real GDP is estimated to have grown by 0.4 percent compared with the three months to April, the data also showed.
The services sector contributed the most, with output rising 0.6 percent. However, production and construction outputs fell by 0.5 percent in both sectors in the May-July period.
"Within services, computer programming was the largest contributor, continuing the strong growth seen throughout the year, with evidence that businesses involved with artificial intelligence and related technologies helped to boost this sector," said ONS Director of Economic Statistics Liz McKeown.
Although the better-than-expected performance signaled more resilience to the fallout from the Middle East conflict than initially forecast, analysts have warned of more challenges in the second half of the year.
"While July's data are encouraging, the challenge now is whether that resilience can withstand a much tougher autumn," said Anna Leach, chief economist at the Institute of Directors.
"As the Middle East conflict intensifies, oil is back above 100 U.S. dollars a barrel, gas prices are at their highest since late 2022, and financial conditions have tightened markedly. These developments will raise inflation, squeeze household incomes and business margins, and weigh on spending and growth," she added.
Ben Jones, senior lead economist at the Confederation of British Industry, echoed Leach's predictions. He noted that higher household energy bills are beginning to bite, while volatile energy markets and a global bond-market sell-off are adding to uncertainty and pushing up borrowing costs.
"Business surveys have become less pessimistic than earlier in the year, but the improvement remains tentative," he said.
Stuart Morrison, research manager at the British Chambers of Commerce (BCC), said the "warning lights of cost pressures and global uncertainty are still flashing for many of the businesses."
To reduce business costs and tackle the youth employment crisis, the BCC has suggested the government should cut employer National Insurance contributions for under-25s.
It also suggests introducing a targeted tax package to ease energy and business rate pressures for all firms while restoring consistent, locally delivered export support to help more smaller firms trade globally and drive growth. ■