Hi Friend, The UK economy grew at a faster rate in the first quarter of the year, according to the latest update from the Office of National Statistics. Rishi Sunak hailed the growth figures as the "fastest growth in the G7." Growth is even better than "gangbusters", the excitable claim from Grant Fitzner, chief economist at the ONS, when the first estimate of GDP growth was announced in May. "The next Prime Minister is likely to inherit an improved economy" according to Jane Croft and Larry Elliott in the Guardian.
But will the economic revision be enough to save Sunak? I doubt that. Just four days before polling day, the Tories still trail Labour by 20 points in the polls but more of that later.
First let's get the growth revision into perspective. GDP growth rose by 0.3% year on year according to the GDP Quarterly National Accounts released on Friday. The first estimate released on the 10th May, marked growth year on year at 0.2%. An improvement OK but not by much.
Headlines react to the ONS statement which leads with growth rate quarter on quarter. At the end of the day, (make that the end of the year), it is the growth rate year on year which counts.
Year on year, the performance was mixed. Manufacturing was up by 1.7%. Construction was down by 0.4%. Service sector growth was up by 0.4%. The transport and Storage sector was down 0.8%. Accommodation and Food, was down by over 1%.
Don't break out the bunting just yet. Yes, the next prime Minister will inherit an improving economy. Growth could be as high as 0.5% in the second quarter. On track for growth of between 0.5% and 1.0% this year. It may well be Rachel Reeves that is the real winner. But the economy will need to grow at a much faster rate to allay fears over spending and borrowing
Just four days before polling day, the Tories still trail Labour by almost 20 points. The latest YouGuv survey has Labour on 36%, the Tories on 18%, just ahead of Reform at 17%. The Farage rally has fixxled, with statements on Putin and Ukraine add the odd hint of racism and right wing extremism in the mix. Not for everyone, the economics of the tap room from a platform of the bar stool.
In terms of seats, Labour could pick up over 220 seats in the house, with 425 MPs in the final count. The Conservatives would be left with just 108 seats, leaving Lib Dems with 50 plus and Reform with just five MPS. That's a big win for Starmer and a massive set back for the Tories. A growth rate of 0.3% is not enough to save Sunak ...
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