Closing post
Time for a recap.
Fears that the UK economy could drop into recession are still swirling, despite better-than-expected GDP data released this morning.
The UK economy picked up pace in the second quarter of this year, with GDP rising by 0.2% – beating expectations that it would stagnate.
Growth was particularly pacey in June, with GDP rising by 0.5% thanks to stronger manufacturing and construction work. There were also more working days compared to May, when the UK downed tools for the coronation.
Rishi Sunak said the GDP report was good news, adding:
At the beginning of the year I made growing the economy one of my top priorities, and we are making progress.
“There’s still more work to do, but today’s figures show the plan is working.
However, both the CEBR and Capital Economics have warned today that the UK could fall into recession in the coming quarters, as high interest rates hit growth.
Craig Erlam, senior market analyst at OANDA, says better weather in June helped the the UK economy showed further resilience toward the end of the second quarter.
The cost-of-living crisis has clearly been an immense drag on the economy and due to its nature, will have hit some households much harder than others. But overall, consumer activity has been very resilient which has ultimately stopped the economy from falling into recession, an outcome that now looks increasingly unlikely.
The economy grew 0.5% in June from a month earlier, much stronger than anticipated and contributing to 0.2% quarterly growth. That’s nothing to write home about, of course, and the economy still faces enormous challenges and pressures, but inflation falling below average earnings growth could enable that spending resilience to continue.
City investors worried that the stronger growth could encourage the Bank of England to keep raising interest rates. This hit share prices in London, where the FTSE 100 index has closed down 94 points or 1.25% at 7524.
However, Resolution Foundation pointed out that the UK economy had recorded its weakest growth in 65 years outside a recession, in recent quarters….
The @ONS released new data today on the British economy.
— Resolution Foundation (@resfoundation) August 11, 2023
It exceeded expectations (of flat growth) by expanding 0.2% on the quarter. But the big picture is not so rosy...
👍 We've avoided a technical recession
👎 We're experiencing the weakest non-recession growth for 65 years pic.twitter.com/9IpMDeRid8
… while still lagging other countries for post-Covid 19 recovery:
How does the UK economy today compare to just before the pandemic?
— Resolution Foundation (@resfoundation) August 11, 2023
We are *still* 0.2% below our pre-pandemic level of GDP - the only G7 country in that position. pic.twitter.com/1V0nlxgOwm
Here’s the full story:
And here’s the rest of the business news:
Updated
English wine producers predict bumper harvests after July rainfall
Some happy news to end the week: England’s wine producers are predicting bumper harvests after perfect weather this year.
Growers are expecting the highest and best yields to date, boosting the burgeoning wine industry in the UK. There are now 943 vineyards across Great Britain, according to a new report from the trade group WineGB. The industry produced 12.2m bottles in 2022, a large rise on the 5.3m bottles in 2017.
Additionally, exports are up from 4% to 7% and it is predicted production will reach 25m bottles by 2032, with 7,600 hectares (18,800 acres) of vines planted. At present there are 4,000 hectares (9,900 acres).
Augusta Raimes, a partner at Raimes English Sparkling, near Alresford, in Hampshire, said temperatures were just right, bringing back memories of 2018, which was a “phenomenal year” for growers. She said:
“We have very nice, clean fruit and big bunches. It’s very exciting.”
