Professor Joe Nellis, MHA’s economic adviser, comments on today’s GDP data
“While the moderate growth in GDP announced this morning will no doubt be welcomed by the Government and business, they do reflect a UK economy that has been close to stagnation since July.
“The over cautious and at times negative messages coming from the Government and an air of uncertainty in the lengthy lead-up to the budget have certainly discouraged corporate investment and household expenditure.
“However, confidence in the UK economy has also been undermined by ongoing geopolitical turbulence – exacerbated by recent escalations in the Middle East – an unusually long wait for the new government’s budget, and the wet weather reducing economic activity. This has all combined to dampen the ‘animal spirits’ that underpin consumer confidence.
“The Government’s slow pace in addressing the problem of disappointing economic growth is not entirely by choice. They have faced a series of unfortunate delays, including the Office for Budget Responsibility requiring 10 weeks’ notice from the Government to prepare its pre-Budget economic and fiscal forecasts, as well as the interruptions caused by the summer parliamentary recess and the party conference season. These delays have impeded the timely communication of a coherent economic strategy to inspire confidence.
“The Government will be hoping that their long overdue Budget and a possible cut in interest rates by the Bank of England early next month will create a more conducive environment for investment, reigniting growth in the UK economy.”
