THE economy grew by 0.4% in July, figures published this morning reveal.
The news comes after GDP grew by 0.4% in the three months to June.
The Office for National Statistics said: “Growth remained relatively robust in the latest three months, as ongoing strength in the services sector was only partially offset by falls in both production and construction.”
GDP is one of the main indicators used to measure the performance of a country’s economy.
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When it goes up, it means the economy is doing well.
When it falls, it means the economy has shrunk.
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No growth is also bad news for the Government.
What it means for your money
GDP measures the economic output of companies, individuals and Governments.
If it is rising steadily, but not too much, it’s a sign of a healthy and prosperous economy.
This is because it usually means people are spending more, the Government gets more tax and businesses get more money which then means pay rises for workers.
When GDP is falling, it means the economy is shrinking which can be bad news for businesses and workers who face pay cuts or even losing their job.
The Bank of England (BoE) also uses GDP and inflation as key indicators when determining the base rate.
This decides how much it will charge banks to lend them money and is a way to try to control inflation and the economy.
If GDP is low, the BoE cuts its base rate in order to encourage people to spend and invest money.
If it is higher, the BoE may keep its base rate higher in order to keep inflation in check.
