UK economy continues to show resilience in the face of serious challenges

“Despite all the doom and gloom surrounding the UK economy, it continues to show remarkable resilience in the face of serious challenges. Growth may be modest, but the economy has expanded for the fourth consecutive quarter – no matter how modestly – something that deserves recognition given the headwinds it’s up against.

“However, the data makes clear that Britain has become a two-speed economy, with services powering ahead and construction ticking up while the manufacturing sector struggles. A large part of that slowdown reflects nervousness over what might come in the Autumn Budget, where the Chancellor is expected to raise taxes to plug an estimated £30-40bn hole in the public finances.

“While today’s figures are a pleasant surprise, they’re unlikely to shift the Bank of England’s thinking on interest rates. We still expect a rate cut next month. Savers should use this window to shop around for a better deal because once rates fall, savings providers will move quickly to cut theirs. For those prepared to take a longer-term view, investing in the stock market remains the most reliable way to outpace inflation.”