Despite these challenges, the UK economy managed to grow by 0.3% between April and June 2023. This is according to the most recent data released by the Office for National Statistics (ONS). The increase was much higher than expected, which was just a 0.1% growth. This acceleration provides a ray of sunshine to a country that has faced years of economic malaise. This number is a drop from the 0.7% growth seen in the first quarter of the year.
Chancellor Rachel Reeves hailed the encouraging new figures for an economy that “has felt stuck for too long.” The government has focused specifically on increasing economic growth – these figures indicate that they are starting to have some success on this front. In fact, the latest estimates for the month of April have all been revised upward significantly. This change reflects a more positive view of the economy’s performance during that period.
Though this is all great news, economists caution that maintaining such growth will be difficult. Ruth Gregory, deputy chief UK economist at Capital Economics, said she was skeptical. She is dubious that the UK will be able to maintain such high growth rate in the coming months. She added that the subdued global economy would put continued downward pressure on the UK’s GDP growth.
“There is more to do to deliver an economy that works for working people.” – Chancellor Rachel Reeves
The ONS data revealed that the economy performed better than expected in June, which contributed to the overall quarterly growth figure. Ongoing concerns about business investment remain. It is impossible to say the full effect of tax increases enacted last April; they would still need time to take full effect. At the same time, speculation has increased around additional tax raises in the likely Autumn Budget. While this is understandable given the ongoing uncertainty, this may be building a cautious consumer sentiment from the inside out.
Transport critics have been raising alarm bells over the intonation of the government’s economic agenda. Conservative shadow chancellor Mel Stride accused Chancellor Reeves of “economic vandalism,” while Liberal Democrat MP Daisy Cooper remarked, “Snails would scoff at the pace that our economy is growing.” Asher’s comments illustrate the continued frustration among certain policymakers at our current economic course.