UK gross domestic product (GDP) increased by 0.3% in June, rising for the first time since March, the Office for National Statistics (ONS) has revealed.

The latest update follows reductions in GDP of 0.1% in April and May respectively.

In the three months to June, GDP grew by 0.3% compared to 0.7% in the first quarter of the year.

Production output was the sector which saw the largest month-on-month increase of 0.7%, following a fall of 1.3% in May.

Construction and services output increased by 0.3% respectively, after construction output fell by 0.5% and services output dropped by 0.1% in May.

Personal finance analyst at Bestinvest, Alice Haine, said the slowdown in quarter-on-quarter GDP reflects rising costs, a cooling labour market and global uncertainty, which has "weighed on business and consumer sentiment".

She stated: "The latest GDP data may deliver some encouragement to Chancellor Rachel Reeves as she pursues her growth agenda. However, the slowdown in the second quarter raises questions about whether current output levels are strong enough to prevent further tax hikes in the Autumn Budget. Recent U-turns on welfare and winter fuel payments have added pressure to the public purse, with mounting speculation that Reeves may target Inheritance Tax gifting rules or gambling levies to raise revenue.

"While five interest rate cuts since August last year have offered some relief, the latest 25 basis-point reduction to 4% may not be reflected in lower borrowing costs across the board as some lenders remain cautious about future rate cut expectations amid niggling inflationary pressures. With food prices continuing to surge, the Bank of England has signalled that interest rates may need to remain elevated for longer as it expects consumer price inflation to peak of 4% in September.

"This will deliver a blow to households, with many still grappling with the lingering effects of the cost of living crisis."

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