UK economy grows 0.6% – General election and strikes blamed for June slump | Business News

Official figures show the UK economy grew by 0.6% in the three months to March.

But the Office for National Statistics said there was no growth at all in June as businesses postponed purchases until after the general election.

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“Businesses across the economy and across a range of industries have said customers are holding back on orders until the election result is known,” the ONS said, but added that the precise impact was difficult to quantify.

The strike was also cited as a cause of the flat line, with junior doctors still on strike at the time.

The ONS said international industry disputes, including last year's Screen Actors Guild strike, were affecting UK film production schedules.

The June GDP figure fell from the previous month, when the economy grew 0.4%.

Gross domestic product (GDP), which measures everything produced in the UK, rose from April to June.

What about England?

This growth rate was the second highest among the G7 industrialized countries, only surpassed by the United States at 0.7%.

However, among the G7 countries, Japan and Germany have not yet released GDP data for that period.

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Looking at the first half of the year, the UK had the highest growth rate, with GDP growth of 0.7% in the first three months of the year.

The ONS said this was due to production in scientific research, IT industry and legal services.

Second, three consecutive months of growth means the recession is long over.

The UK is defined as entering a recession if the economy contracts for two consecutive quarters by the end of 2023.

Why is it important?

The Labour government argued that economic growth was the cause of its success.

Without growth, essential public sector investments cannot be made, and the government has said it does not want to increase borrowing but instead wants to reduce the national debt.

This data is good news, but it is not welcome.

A good week on the economic news front

To be honest, this week was a good week for economic news.

Today’s outstanding GDP growth figure of 0.6% is in line with expectations but reflects what has been a year of strong growth. The UK economy has been the fastest growing of the G7 this year, but lagged the US slightly in the last quarter.

It's been years since we've seen such positive macroeconomic conditions, with falling unemployment, rising wages, and relatively stable inflation.

Normally the government would be trumpeting such good news from the rooftops, but this morning the Treasury kept talking about “the scale of the challenge” and said it was “determined to fix the foundations”.

Why? Because they don't want the Conservatives (who are, unsurprisingly, very frustrated) to claim they didn't leave the country in such a terrible state.

Politically, it is important as part of Labour's broader strategy to undermine the Conservatives' record and establish future credit for good economic news.

But despite attempts to shape the narrative, ultimately voters will only be grateful to Labour if this impressive economic growth continues.

Chancellor of the Exchequer Rachel Reeves said: “The new government has no illusions about the scale of the challenge we have inherited after more than a decade of low growth and a £22 billion black hole in the public finances.”

“That’s why we made economic growth our national mission and why we’re taking the tough decisions now to fix our foundations so we can rebuild Britain and make every corner of the country a better place.”

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