Britain’s economy grew by 0.6 per cent between April and June as it continued its recovery from last year’s recession, but the Chancellor warned “tough decisions” would still be needed over public finances.

The latest growth comes on top of a 0.7 per cent expansion in the first quarter which was the fastest in more than two years, the Office for National Statistics (ONS) said.

Liz McKeown, ONS director of economic statistics, said: “The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year. Growth across the three months was led by the services sector, where scientific research, the IT industry and legal services all did well.”

Sir Keir Starmer has put growth at the top of his Government’s priorities promising to take the “brakes off” the economy. One economist called it another “gangbusters” performance that saw it expand more than the US and twice as fast as France.

Despite the above-expected growth and the prospect of higher tax revenues, Chancellor Rachel Reeves cautioned against over-optimism, saying: “The new Government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a £22bn black hole in the public finances. That is why we have made economic growth our national mission and we are taking the tough decisions now to fix the foundations, so we can rebuild Britain and make every part of the country better off.”

Britain’s current economic performance puts it ahead of the US, where growth was 1.1 per cent and more than double France’s 0.6 per cent expansion in the same period, while Italy has seen 0.5 per cent growth. Canada has still to publish its latest figures. Germany’s economy, which like Britain’s has struggled with high energy costs, is lowest at 0.3 per cent but is currently subject of a review which could see a major upward revision in the numbers after economists reassess its performance during the pandemic.

Concerns remain over the fundamental strength of the UK economy. The latest GDP figures, while positive, remain lower than a year ago and before the pandemic struck. Compared with rival major economies over a longer period shows the UK’s growth record since the eve of the pandemic is the second worst in the G7, higher only than Germany’s – which is subject to revision.

The OECD, the international economic advisory group, has forecast that the UK will fall to the bottom of the G7 growth league in 2025, with growth of just 1 per cent.

Simon Pittaway, economist at the Resolution Foundation, says: “The UK economy has continued to bounce back from its recession last year, and has recorded the strongest growth of any G7 economy over the past six months.

“But that’s where the good news ends. Britain’s medium-term record is far less impressive, and has been driven by a growing population rather than rising productivity.

“Without a return to productivity growth, living standards will continue to stagnate and Britain will continue to fall behind its peers.”

Separate figures published by the ONS show UK productivity as a whole has weakened, highlighting underlying problems within the economy. The new ONS data show output per hour worked fell by 0.1 per cent in April-June this year, compared with the same quarter in 2023. In the first quarter this year the ONS estimated UK productivity was down by 0.3 per cent compared with the previous quarter.

There are also widespread concerns that the strong economic growth in the first half of this year is unlikely to be replicated in the second half of 2024. Industry groups say their surveys point to a slowdown in the final six months of the year unless interest rates fall and the government follows through on its election promises and dismantles barriers to further growth.

Sanjay Raja, UK chief economist at Deutsche Bank, said the latest figures were good news in that the overall size of the economy should rise with a better outlook than the Office for Budget Responsibility presented to the country in March this year.

“For the Bank of England, the slightly lower growth rate should leave the door open to further rate cuts – particularly given weaker inflation data.”

But he warned against expecting the strong growth to last. “We should see some slowdown. Indeed, June GDP flatlined, with the services sector shrinking by 0.1 per cent month on month. Carry-over effects into the third quarter will be weaker. And catch-up effects, following on from the short and shallow technical recession we had in second half of 2023, will likely diminish.”