Britain may not see a rapid recovery from the weak growth seen in the first quarter. Recent economic data have been disappointing the manufacturing sector picked up more slowly than expected in May, and surveys of the services sector have also disappointed.
Meanwhile, annual house-price growth dropped to 4.6% last month, the first sub-5% reading since 2013, according to Nationwide. However, mortgage approvals rose by over 6,000 in April, said the Bank of England, the biggest monthly gain in over six years. Consumer confidence remains near 13-year highs.
What the commentators said
A rate rise this year seems unlikely, agreed Capital Economics. But while the recovery is clearly still "a bit fragile", a "sustained slowdown" is unlikely. The main driver should be consumption, which accounts for around 60% of GDP. The labour market is still strengthening, earnings growth should keep climbing, and inflation has disappeared for now, bolstering real incomes.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Real household spending is on track to grow by 3% in 2015, the most in ten years. So with sterling strength squeezing manufacturers, Britain is once again relying on household spending to keep the show on the road, said Alex Brummer in the Daily Mail.
Chancellor George Osborne's vision of a UK "carried aloft by the march of the makers" looks more and more like "a Budget 2011 hallucination", said Alistair Osborne in The Times. Back then, manufacturing comprised 12.8% of GDP; now it's 10%. That's not a march it's "a limp". And it's domestic demand for consumer goods that is propping the sector up.
Of course, we are an economy dominated by sevices. But perhaps Osborne will let us know in next month's Budget where the high-tech exporters, crucial to the rebalancing he's always banging on about, have gone.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
