UK economic system returned to progress in August | EUROtoday

The UK returned to progress in August however the “broader picture” is certainly one of a “slowing” economic system in current months, the official statistics physique has mentioned.

A bounce again in development and robust month for accountancy, producers and retail companies helped increase the economic system by 0.2%, after it didn’t develop within the earlier two months.

But financial progress is weaker in contrast with the primary half of the 12 months, the Office for National Statistics (ONS) mentioned.

Its newest figures come as the federal government prepares for the Budget on the finish of October.

Prime Minister Sir Keir Starmer has warned the Budget shall be “painful”, with the federal government admitting some taxes will rise.

Liz McKeown, director of financial statistics on the ONS, mentioned accounting, bookkeeping and auditing companies had helped to spice up the economic system alongside retail and producers in August.

She added development additionally bounced again from July’s downturn, with new infrastructure tasks beginning up, however added: “The broader picture is one of slowing growth in recent months, compared to the first half of the year.”

Ben Jones, lead economist on the CBI enterprise group, mentioned it was clear some corporations had “paused hiring and investment decisions” earlier than getting “more clarity over the direction of the new government’s economic policies” within the Budget.

“The big question mark is the government’s vision for the economy,” mentioned Barret Kupelian, chief economist at PwC, including that for financial progress to be sustained, “businesses, households and foreign investors require certainty to make choices”.

There is rising hypothesis over what tax rises the Chancellor, Rachel Reeves, will announce, given the federal government has promised to not improve the burden on “working people” and dominated out growing VAT, nationwide insurance coverage or revenue tax.

A hike in capital good points tax has been rumoured. This is charged on earnings constituted of the sale of an asset that has elevated in worth, reminiscent of second houses. Other selections out there to the chancellor embrace decreasing the tax aid on pensions and elevating gas responsibility.

The Budget would be the authorities’s first huge alternative to set out its spending and taxation priorities, but it surely comes in opposition to a backdrop of upper debt following the pandemic, increased rates of interest and inflation that has solely lately returned to regular ranges.

Reeves is planning to vary borrowing guidelines to release billions of kilos extra in spending for large tasks in a bid to spice up the economic system, however the transfer is not going to forestall her introducing additional tax rises.

The chancellor mentioned on Friday that rising the UK economic system was the federal government’s high precedence, “so we can fix the NHS, rebuild Britain, and make working people better off”.

The ONS displays GDP – or gross home product – on a month-to-month foundation, however extra consideration is paid to the development over three months. Weaker efficiency earlier in the summertime meant progress of simply 0.2% between June and August in contrast with the earlier three months.

At the top of final 12 months the UK fell right into a shallow recession, with the economic system contracting for 2 three-month intervals in a row. Growth rebounded within the first half of 2024.

The newest progress figures come forward of an International Investment Summit in London subsequent week, the place the federal government will attempt to appeal to billions of kilos of funding into the UK.

Anna Leach, chief economist on the Institute of Directors, mentioned the federal government wanted to “shift the narrative” away from the nation’s debt pile and as an alternative concentrate on “building tomorrow’s economy”.

“That’s the key to sustainable public finances and higher living standards,” she mentioned, including each the funding summit and Budget present alternatives for the federal government to draw funding by explaining its plans in additional element.

On Friday, the proprietor of Scottish Power – Spanish vitality large Iberdrola – introduced plans to double its funding within the UK over the following 4 years from £12bn to £24bn.

Keith Anderson, chief govt of Scottish Power, advised the BBC’s Today programme that the money can be used to broaden the UK’s electrical energy grid so as to join extra houses and companies.

He mentioned the primary factor the corporate had requested for the federal government to do was to hurry up the planning course of so as to full tasks sooner.

“If you make planning twice as fast, we will invest twice as much money, and that is what we are bringing forward today,” he mentioned.

The authorities plans to nearly totally substitute fossil fuels with clear and renewable vitality from UK electrical energy manufacturing by 2030, although critics declare it isn’t achievable within the timeframe and can ship payments increased.

People, largely in rural areas, even have issues over the development of the pylons, cables and substations wanted to transmit electrical energy across the nation.

But Mr Anderson mentioned the spike in vitality payments in recent times was attributable to gasoline costs being “volatile” and that switching to wind energy would result in payments falling “over a number of years”.