Andy Burnham received positive news as recent data showed that the UK economy performed better than expected in May. According to the Office for National Statistics, the gross domestic product (GDP) increased by 0.1%, rebounding from a similar decline in April and surpassing forecasts of stagnation.
This slight growth is a welcome development for Burnham as he gears up to assume the role of Prime Minister and assemble his new cabinet. Shabana Mahmood is now emerging as the top contender for the crucial position of Chancellor.
The service sector saw a 0.3% expansion in May, offsetting declines of 0.5% in production and 0.8% in construction. Over the three months leading to May, GDP climbed by 0.7% following a revised upward growth of 0.8% in the previous three-month period.
The ONS highlighted the impact of the Middle East conflict on various industries, such as manufacturing, hospitality, travel, and entertainment. Businesses cited disruptions in global supply chains due to the conflict in Iran as a common concern.
Economists at Pantheon Macroeconomics noted that the May upturn positions the economy for an overall second-quarter growth of 0.3%, a decrease from the 0.6% growth in the first quarter. Despite the resilience exhibited so far, they anticipate that interest rates will remain unchanged for an extended period, but a rate hike is considered more probable than a cut.
The Bank of England is scheduled to announce its rate decision on July 30, along with the release of the latest quarterly economic forecasts. Danni Hewson from AJ Bell remarked that while the growth is a positive starting point for Burnham, the modest 0.1% expansion falls short of the robust momentum required to ensure the nation’s prosperity.
TUC General Secretary Paul Nowak emphasized the importance of sustained economic growth for job creation and income enhancement. However, he cautioned that many working individuals continue to face financial challenges despite the improvements.
Looking ahead, the new Prime Minister is urged to prioritize economic stability, as noted by Fergus Jimenez-England of the National Institute of Economic and Social Research. The Treasury affirmed that the UK’s economic strategy has bolstered its position compared to two years ago, with notable growth performance within the G7 and OECD rankings.
Both the OECD and the International Monetary Fund have revised their projections for UK growth upwards, indicating a more optimistic outlook for the future.