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. The gross domestic product (GDP) of the country showed a growth of 0.1% in May, surpassing previous predictions of a flat outcome after a similar decline in April.
This modest growth is beneficial for Burnham as he prepares for assuming the role of Prime Minister and forming his new cabinet. Shabana Mahmood is now considered the frontrunner for the crucial position of Chancellor. The service sector saw a 0.3% increase in output in May, offset by declines of 0.5% in production and 0.8% in construction.
GDP rose by 0.7% in the three months leading to May, following an upward revision of 0.8% in the preceding three months. The ONS highlighted the impact of the Middle East conflict on various sectors like manufacturing, hospitality, travel, and entertainment, noting disruptions in global supply chains due to tensions in Iran.
Economists at Pantheon Macroeconomics stated that the May growth sets the economy on a trajectory for a 0.3% expansion in the second quarter, lower than the 0.6% growth in the first quarter. They suggested that the current resilience indicates a likelihood of stable interest rates in the near future.
The Bank of England is scheduled to make rate decisions on July 30, coinciding with the release of its latest economic forecasts. Danni Hewson from AJ Bell pointed out that although the growth is a positive start for Burnham, the marginal increase is not sufficient to address the needs of the population effectively.
TUC General Secretary Paul Nowak emphasized the importance of sustained economic growth for job creation and income improvement but cautioned that many working individuals across the nation still face financial challenges. He called for the new government to prioritize enhancing living standards, particularly by reducing energy bills through taxing excessive bank profits.
Fergus Jimenez-England, an associate economist at Niesr, stressed the necessity for the incoming Prime Minister to prioritize economic stability given the fragile nature of the current growth. The Treasury spokesperson reiterated the government’s economic strategy, highlighting the UK’s improved position compared to previous years.
Both the OECD and the International Monetary Fund have recently revised their forecasts for UK growth in a more positive direction, indicating better-than-expected performance in the coming years.