The data for the first six months are in and the result is clear: the British economy has started 2024 much better than pretty much anyone expected.

Admittedly, the economy stagnated, looking specifically at June. But overall growth of 0.6% in the second quarter, closely following the 0.7% in the first quarter, marks a remarkable recovery from a very small technical recession in the second half of last year.

The most obvious explanation is the improvement in real wages that the UK economy is currently experiencing. The impact of lower natural gas prices, coupled with much more moderate food price increases, comes at a time when nominal wage growth has remained above 5% in recent months. The most acute phase of the mortgage crisis was also over by the end of 2023, and that, together with the impact of some personal tax cuts last November and again in March, probably helped too.

However, this is clearly not the whole story. Private spending rose by 0.2% in the second quarter, after 0.4% in the first quarter. This is clearly less rapid than overall GDP.

The services sector contributed strongly to growth in the second quarter, but much of it cannot be explained by consumers. Rather, it was sectors like professional services that lifted the economy. And when we look at the other details, it is difficult to identify many other trends that held across both quarters. For example, manufacturing was a drag on overall GDP in the second quarter, but if you exclude June, production jumped. Imports also fluctuated widely.