The UK economy’s stronger-than-expected performance in July has strengthened the case for a firmer third quarter, with Deutsche Bank arguing that the country’s growth story is becoming “harder to ignore”.
GDP expanded 0.4% month on month in July, against expectations for no growth, with services rising 0.4%, production up 0.2% and construction gaining 0.1%. Manufacturing climbed 0.9%.
Technology-related industries were among the strongest performers, with computer programming and consultancy services up 3.5%, while telecoms and information services both increased 1.1%.
Deutsche Bank highlighted the figures as evidence that investment in artificial intelligence may increasingly be feeding through into the wider economy.
“What’s going on? If we look at the services sector in the UK – the engine of growth in the country – signs of AI capex are coming through even more,” the bank noted.
Annualised UK growth is now tracking at around 2.4%, while Deutsche Bank also pointed to evidence that the economy is producing more output despite weaker employment growth, suggesting productivity may finally be improving.
“The UK growth story is becoming harder to ignore,” the bank commented.
Deutsche Bank now expects third-quarter GDP growth to come in at around 0.4% quarter on quarter, compared with its previous forecast of just 0.1%, and expects broader growth projections to be revised higher following the July data.
