UK economy grew less than thought in spring

UK economic growth between April and June was less than previously estimated, according to official figures.

Gross domestic product (GDP) – which measures all the economic activity of companies, governments and people in a country – rose by 0.5%, down from an initial reading of 0.6%.

The manufacturing and construction sectors fell by more than first thought.

The data has emerged as the Labour government, which has made economic growth one of its key policies, prepares to announce its first Budget in four weeks’ time.

The Office for National Statistics (ONS), which published the figures, said the production of transport and related equipment tumbled by 3.1% between April and June after a long period of growth.

It was first estimated to have fallen by 0.7%.

The ONS said there was evidence to suggest that factories had reduced manufacturing as they prepared for the shift to making electric cars.

Construction also dropped due to a continuing decline in building new homes. However, the ONS said there were some signs this was beginning to ease.

Paul Dales, chief UK economist at Capital Economics, said the downward revision “shouldn’t make the Bank of England worry too much about the economy running out of momentum”.

However, he added: “It may add to the Bank’s view that interest rates need to be reduced further.”

The Bank of England cut interest rates for the first time in nearly four years in August, to 5% from 5.25%.