The UK economy had surprise growth in the month Andy Burnham became Prime Minister.
Official figures from the Office for National Statistics (ONS) have revealed GDP expanded 0.4 per cent in July, racing ahead of City economists’ forecast of zero growth.
This was led by 0.4 per cent growth in the UK’s mammoth services sector, which is responsible for around 80 per cent of GDP output. Production grew 0.2 per cent while construction expanded 0.1 per cent.
“Within the services sector, computer programming was the largest contributor, continuing the strong growth seen throughout the year, with evidence that businesses involved with AI and related technologies helped to boost the secotr,” Liz McKeown, director of economic statistics at the ONS, said.
McKeown added some businesses saw a diverse range of impacts from the World Cup with some beneficiaries while “creating challenges for others”.
The figures cover the final months of Rachel Reeves’ Chancellorship before she was ousted after Andy Burnham entered No 10 Downing Street on 20 July.
Burnham faces new fiscal pressures
Burnham and his Chancellor John Healey have faced mounting pressure since taking the reins as the surge in global borrowing costs threatens to slash the government’s fiscal headroom.
Some economists have forecast the £22bn in fiscal headroom left by Reeves in her 2025 Budget could be as much as halved after a global bond sell-off spiked gilt yields.
Analysts have warned Healey has little room for further borrowing and will be forced to hike taxes at his first Budget in order to stay within the fiscal rules, which state that day-to-day spending must match receipts by 2030.
Top bosses of Britain’s largest industry groups have urged the Chancellor to reduce the cost of business in order to boost growth across the UK economy ahead of his first Budget.
In his first major speech in the role at the beginning of the week, Healey said he would not “speculate on questions of tax“.
He laid out his focus on boosting growth “in more places” and its importance in securing the public finances. Answering media questions, the former defence minister promised the government was “keeping” Labour’s 2024 manifesto pledges that ruled out hikes to income tax, VAT and national insurance.
The speech came almost simultaneously as Jaguar Land Rover – which is headquartered in Coventry, where the speech was taking place – confirmed plans to cut thousands of jobs as it looks to slash around £1.7bn from its cost base over the next two years.