This morning’s upgrade to UK growth in April-June is a boost to Andy Burnham, analysts say, even though he didn’t take office until almost a month later.
Chris Beauchamp, chief market analyst at IG, says:
“Still on a post-speech high, the upgraded figure is yet more good news for the UK’s still-new(ish) prime minister.
The highest growth in the G7 for the first half is certainly a headline and one that will help keep nervous MPs in line for a while, plus it helps take off pressure for a new election - why risk it now when things appear to be improving nicely.”
The upward revision to real GDP growth in Q2, from 0.4% q/q to 0.5% q/q, suggests that the economy has been a bit more resilient to higher energy prices in the first half of the year than previously thought. This resilience may continue into Q3, but we still expect it to fade in Q4 as higher inflation takes a bigger bite out of households’ real incomes.
The 0.5% q/q gain in Q2 real GDP followed unrevised growth of 0.6% q/q in Q1, with the breakdown still showing that the economy is no longer being heavily supported by government spending, which contracted by 0.5% q/q (revised down from -0.3%).
“The upward revisions to Q2 GDP growth means the economy was even stronger in the first half of the year than we previously expected, despite the Iran war. What’s more, the composition of growth looks a little healthier. Surveys suggest that much of that positive momentum has been carried forward into Q3 meaning we have revised up our annual GDP forecast to 1.4%.
“However, the next six months looks tougher with potential interest rate rises, a sharp increase in inflation and another tax raising budget all to come. That will drag heavily on growth over the winter.
“Greggs served up a tasty trading update, with total sales growth accelerating to 7.7% over the third quarter.
This was driven by more settled weather in recent months, alongside ongoing menu development and product innovation. New store openings also played their part, with the group on track for 100-110 net openings this year, excluding 12 Express locations, making it easier for more customers to tuck into their freshly baked goods.
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