Andy Burnham received positive news as recent data showed that the UK economy performed better than expected in May. According to the Office for National Statistics, the gross domestic product (GDP) of the country increased by 0.1%, rebounding from a similar decline in April and surpassing forecasts of stagnation.
This modest growth is seen as a boost for Burnham as he gears up to assume the role of Prime Minister and form his new cabinet, with Shabana Mahmood emerging as a top contender for the position of Chancellor. The service sector saw a 0.3% expansion in May, although this was partly offset by decreases of 0.5% in production and 0.8% in construction.
In the three months leading up to May, GDP expanded by 0.7% following a revised upward growth of 0.8% in the preceding three months. The ONS highlighted that the conflict in the Middle East had disrupted various industries, affecting manufacturing, hospitality, travel, and entertainment sectors.
Economists at Pantheon Macroeconomics noted that the May upturn puts the economy on track for an overall growth of 0.3% in the second quarter, down from the 0.6% growth in the first quarter. Despite the resilience shown so far, interest rates are expected to remain unchanged for an extended period, with a potential increase more likely than a cut in the future.
The Bank of England is scheduled to make its next rate decision on July 30, coinciding with the release of its latest economic forecasts. Danni Hewson from AJ Bell commented that while the growth is a positive start for Burnham, the 0.1% increase is insufficient for substantial celebration and falls short of the necessary momentum to benefit the general populace.
TUC General Secretary Paul Nowak emphasized the importance of sustained economic growth for job creation and income enhancement. However, he cautioned that despite improvements, many working individuals across the country are still facing financial challenges. Nowak stressed the need for the new Prime Minister to prioritize improving living standards by reducing energy bills for most households through levies on excessive bank profits.
Fergus Jimenez-England, an associate economist at Niesr, underscored the fragility of the current growth trajectory, urging the incoming Prime Minister to prioritize economic stability. A Treasury spokesperson highlighted the government’s economic plan, asserting that the UK has experienced substantial growth compared to two years ago, with recognition from international bodies such as the OECD for restoring stability.
Both the OECD and the International Monetary Fund recently revised their forecasts for UK growth in a more positive direction for 2026.
