Euro 2020 not a ‘silver bullet’ for UK economy says commentator
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Chancellor Rishi Sunak said the official figures proved the UK was “on the mend”, adding: “With the fastest quarterly growth rate among the G7 economies we have exceeded expectations, and I’m pleased to see the UK bouncing back.” National output (GDP) rose again in June, by another 1 percent, although it remains 2.2 percent below where it was before the global economic downturn that was caused by the pandemic. Mr Sunak pointed out yesterday that Britain’s GDP has grown faster than that of any other member of the G7 group of advanced economies.
He said the figures “show that our economy is on the mend showing strong signs of recovery, thanks to our Plan for Jobs and successful vaccine programme.
“I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.
“With the fastest quarterly growth rate among the G7 economies we have exceeded expectations and I’m pleased to see the UK bouncing back.”
Data showed the UK’s 4.8 percent growth from April to June compared with 1.6 percent in the US, 1.5 percent in Germany and 0.9 percent in France. Echoing the Chancellor’s upbeat reaction, Boris Johnson described the figures as “encouraging”.
The Prime Minister said: “There will be challenges ahead, but our successful vaccination programme and Plan for Jobs combined with the strength and resilience of the British people puts the UK in a strong position as we build back better from the pandemic.”
June’s 1 percent expansion was the fifth consecutive month of growth.
Increased sales of food and drink as lockdown measures were lifted gave a significant boost to growth, as did a busier healthcare sector. More people visited doctors for non-Covid problems, so the consumption of health services rose by 5.1 percent between April and June.
Economists at Pantheon Macroeconomics research consultancy had expected GDP to grow by 4.7 percent in the second quarter while the Bank of England had predicted growth of 5 percent over the three months.
Jonathan Athow, the deputy national statistician for economic statistics, said: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining, while spending on advertising was boosted by the reopening of many services.
“Health services also showed growth, with many more people visiting their GP. However, GDP is still around two percentage points below its pre-pandemic peak.
“The often-erratic pharmaceutical industry saw a large monthly fall while oil and gas production again fell as North Sea maintenance continued. Energy usage also dropped as summer finally arrived. While goods imports from both EU and non-EU countries increased in June, total goods exports were down with car exports faltering due to previous months’ production problems.”
Julian Jessop, economics Fellow at the free-market think tank the Institute of Economic Affairs, said: “The pick-up in UK economic growth in June is reassuring after the recovery appeared to falter in May.
“With Covid restrictions eased further since, and the ‘pingdemic’ permitting, GDP is on course to return to pre-pandemic levels by the autumn. This would be much sooner than most [people] had expected.
“The Chancellor should therefore continue to wind down support that is no longer required, including the furlough scheme, and allow stronger growth to repair the public finances without even more tax increases.”
He continued: “The main headwinds are now coming from problems on the supply side, including shortages of parts and raw materials, which are holding back manufacturing and construction.
“These are global problems – Germany has actually been hit harder than the UK – and should ease over time. But these emerging capacity constraints also strengthen the case for central banks to end money printing sooner rather than later.”
John O’Connell, the chief executive of the TaxPayers’ Alliance, said: “These figures show promising signs of recovery.
“But we are not out of the woods yet and bumper growth is needed to tackle the colossal cost of Covid. The Chancellor must focus on stimulating the economy by committing to tax cuts, eliminating red tape and supporting taxpayers and businesses.”
Shadow Chancellor Rachel Reeves said: “After overseeing the worst economic crisis of any G7 country, the Conservatives have done nothing to tackle the insecurity in our economy. Businesses remain uncertain about debt, people are worried about rising inflation, the misjudged cut to Universal Credit is looming and the increasing cost of living is making it more difficult for families to get by.
“Our recovery should be built on secure, well-paid jobs, thriving industries, strong public services, support for communities across the country and a sustainable future. The Conservatives have failed to make that happen.”
TUC general secretary Frances O’Grady warned: “The economy is still fragile, with nearly two million people still on furlough. A premature end to furlough will needlessly cost jobs and harm our economic recovery.”
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