Development figures exceeded modest expectations – however this may very well be nearly as good because it will get

GDP exceeded modest expectations in June and for the second quarter as an entire, however maybe one of the best that may be mentioned of the economic system on the midway level within the yr is that issues may very well be worse.

That was definitely the chancellor’s response to month-to-month progress of 0.5% and a three-month determine of 0.2%.

Jeremy Hunt pointed to the very fact the UK had prevented recession – a low bar for any finance minister – and would possibly outperform Germany, Italy and France.

The perky determine for June was largely attributed to the bounce again from the miserable affect of the coronation in May, when three Bank Holidays dragged down output, and the recent climate (do not forget that?) which boosted client spending in pubs and eating places.

There was additionally a lift from manufacturing with the Office for National Statistics (ONS) describing automobile and pharmaceutical progress as “buoyant”, a phrase not often utilized in reference to the British economic system in latest months.

These figures might give consolation to Mr Hunt and Prime Minister Rishi Sunak that the pledge to develop the economic system by the tip of the yr is at the least technically deliverable, however what occurs subsequent stays unsure.

Optimists can level to the truth that, regardless of the highest inflation within the G7, an unprecedentedly tight labour market, hovering power payments and the relentless upward march of rates of interest, the UK has prevented a downturn.

Consumer demand has proved resilient regardless of all the opposite pressures on family budgets, maybe indicating that the financial savings stuffed into metaphorical mattresses in the course of the pandemic haven’t been used up but.

The flip aspect is that this may very well be nearly as good because it will get.

The Bank of England is making an attempt to squeeze those self same shoppers to mood inflation and mentioned final week it would have to take action for longer.

The dominance of fixed-rate mortgages within the UK housing market implies that whereas the ache of hovering rates of interest is felt immediately and painfully by those that must refinance, the affect is extra gradual throughout the economic system.

That resilience might make additional fee hikes extra possible, and with unemployment forecast to extend, wage progress might sluggish as the roles market weakens too.

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Despite greater Q2 progress than Germany and Italy, broader worldwide comparisons stay unflattering.

Judged by quarterly progress, the UK economic system remains to be 0.2% smaller than earlier than COVID, whereas Germany, Italy, France and the US have all recovered to above pre-pandemic ranges.

The Resolution Foundation in the meantime calculates that within the final 18 months, UK progress has been the bottom outdoors intervals of recession in 65 years – a technical evaluation, however one in line with Mr Hunt’s view that we’re caught in “a low-growth trap”.