Andy Burnham received positive news with the UK economy performing better than expected in May, according to recent figures released by the Office for National Statistics (ONS). The country’s gross domestic product (GDP) saw a 0.1% growth in May, surpassing predictions of a flat outcome following a similar decline in April.
This modest growth is seen as a boost for Burnham as he prepares to assume the role of Prime Minister and appoint his new cabinet. Shabana Mahmood is now considered a front-runner for the position of Chancellor in Burnham’s administration.
The ONS reported a 0.3% growth in the service sector in May, while there were declines of 0.5% in production and 0.8% in construction. Over the three months leading up to May, GDP increased by 0.7%, following an upward revision of 0.8% in the previous three months.
The ONS highlighted the impact of the Middle East conflict on various sectors such as manufacturing, hospitality, travel, and entertainment. Businesses cited disruptions in global supply chains due to the conflict in Iran as a significant factor affecting their operations.
Economists at Pantheon Macroeconomics noted that the May growth sets the economy on track for a 0.3% overall growth in the second quarter, lower than the 0.6% growth in the first quarter. They suggested that the current resilience could lead to a sustained period of stable interest rates, with a potential for an increase rather than a cut in rates in the future.
The Bank of England is scheduled to make its next rate decision on July 30, alongside the release of its latest economic forecasts. Danni Hewson from AJ Bell emphasized the importance of addressing living standards and economic challenges for the new Prime Minister, stating that the modest growth should be a starting point for more substantial improvements.
TUC General Secretary Paul Nowak stressed the need for sustained economic growth to benefit working people across the country. He called for a focus on reducing energy bills for households by taxing banks to support economic stability and boost consumer spending.
Fergus Jimenez-England, an associate economist at Niesr, highlighted the fragility of the current growth trajectory, emphasizing the importance of economic stability for the incoming government. The Treasury expressed confidence in the UK’s economic plan, citing improved growth rates and stability compared to previous years.
Both the OECD and the International Monetary Fund recently revised their projections for UK growth in a positive direction, indicating a more optimistic outlook for the country’s economic performance.
