Rishi Sunak’s pre-election drive to revive growth was hit on Friday by new data showing the economy barely moved out of first gear in the year’s second quarter.
The GDP growth of 0.2 per cent in the three months to June was announced as junior doctors went back on strike, and as the number of migrants crossing the Channel since 2018 reached 100,000. Another 755 people were detected in small boats on Friday - a new daily high for the year.
Together, the developments threatened to undermine the Prime Minister’s five signature pledges made in January before he faces voters probably next year.
But the Office for National Statistics also said the economy grew by 0.5 per cent in June, a better than expected recovery from the -0.1 per cent in May when output was held back by a lost working day for the King’s Coronation celebrations.
Growth was 0.2 per cent in April, and stood at 0.1 per cent in the first quarter of 2023.
“This is good news,” Mr Sunak said on social media.
“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,” he said.
The quarterly GDP growth means that there is no immediate risk of recession - defined as two consecutive quarters of shrinking output - and the pound rallied slightly on currency markets.
“We are proving more resilient. We are in line with our peers across Europe,” Chief Secretary to the Treasury John Glen insisted on Sky News.
The Cabinet minister underlined the impact of strikes across various sectors, including by the doctors and by train drivers, and the extra bank holiday in May.
But analysts said the impact of Bank of England rate rises would hit harder in the year’s second half, and Labour said there was zero to celebrate in the latest data.
“Growth in the economy is still on the floor,” Shadow Chancellor Rachel Reeves said.
“Thirteen years of economic mismanagement under the Conservatives has left Britain worse off and trapped in a low growth, high tax cycle,” she said.
“Labour’s plan for the economy will boost growth, increase wages and bring down bills so working people are better off.”
David Bharier, head of research at the British Chambers of Commerce, said: “While the UK remains on course to avoid a technical recession, small movements in one direction or the other won’t mean much for many firms facing the toughest trading conditions in years.”
Mr Glen also insisted that “we have made progress” on the Prime Minister’s pledge to bring down hospital waiting lists, even as other figures on Thursday from NHS England showed a record 7.6 million people were waiting to start treatment at the end of June.
“But we can’t have inflationary pressures, additional pressures, by paying 35 per cent”, the minister said, referring to the British Medical Association’s pay demand for junior doctors as they began their latest four-day strike on Friday.
Mr Sunak has pledged to halve inflation, and also to “stop the boats” crossing the Channel. But with the 100,000 benchmark being surpassed on Friday, Cabinet splits are deepening over how to confront the asylum crisis after the Government this week commissioned a barge off Dorset to house some of the migrants.
Immigration Minister Robert Jenrick on Thursday refused to rule out UK withdrawal from the European Convention on Human Rights to facilitate the Government’s plan to deport illegal migrants to Rwanda.
Mr Glen, however, said he opposed exiting the ECHR. “No, because I believe in the plan that we’ve got in place. It hasn’t finished the legal process yet,” he said on LBC, ahead of a Supreme Court ruling on the Rwanda plan.
