UK economy shows surprising strength

Britain is showing surprising signs of economic strength, with the services sector recording its best growth in six months and consumer confidence hitting a two-year high. The economy expanded by 0.3% in June and 0.4% in the second quarter, putting the UK on track for the fastest growth among the G7 advanced economies in the first half of the year. The WSP Global Purchasing Managers' Index for services rose to 52.8, above all forecasts, while the Confederation of Indian Textile Industry's manufacturing order books reached their highest level since November 2024. Consumer confidence, as measured by GfK, improved to -14 in August, and retail sales volumes showed strong growth over three months. These positive data provide an early boost for new Prime Minister Andy Burnham and finance minister John Healey ahead of the first budget in October. However, risks remain: inflation is expected to exceed 3% due to the U.S.-Israeli war on Iran, and public finances are strained, with an unexpected budget deficit last month. The United Kingdom — Office for National Statistics revised down borrowing estimates for May and June by £7.5 billion combined.