Development figures exceeded modest expectations – however this might be nearly as good because it will get

GDP exceeded modest expectations in June and for the second quarter as a complete, however maybe the most effective that may be mentioned of the economic system on the midway level within the 12 months is that issues might be worse.

That was actually the chancellor’s response to monthly growth of 0.5% and a three-month figure of 0.2%.

Jeremy Hunt pointed to the actual fact the UK had averted recession – a low bar for any finance minister – and may outperform Germany, Italy and France.

The perky determine for June was largely attributed to the bounce again from the depressing impact of the coronation in May, when three Bank Holidays dragged down output, and the new climate (do not forget that?) which boosted client spending in pubs and eating places.

There was additionally a lift from manufacturing with the Office for National Statistics (ONS) describing automotive and pharmaceutical progress as “buoyant”, a phrase hardly ever utilized in reference to the British economic system in current months.

These figures could give consolation to Mr Hunt and Prime Minister Rishi Sunak that the pledge to grow the economy by the end of the year is at the least technically deliverable, however what occurs subsequent stays unsure.

Optimists can level to the truth that, regardless of the highest inflation within the G7, an unprecedentedly tight labour market, hovering vitality payments and the relentless upward march of rates of interest, the UK has averted a downturn.

Consumer demand has proved resilient regardless of all the opposite pressures on family budgets, maybe indicating that the financial savings stuffed into metaphorical mattresses through the pandemic haven’t been used up but.

The flip aspect is that this might be nearly as good because it will get.

The Bank of England is making an attempt to squeeze those self same customers to mood inflation and mentioned final week it’s going to have to take action for longer.

The dominance of fixed-rate mortgages within the UK housing market signifies that whereas the ache of soaring interest rates is felt instantly and painfully by those that must refinance, the affect is extra gradual throughout the economic system.

That resilience could make additional fee hikes extra doubtless, and with unemployment forecast to extend, wage progress could gradual as the roles market weakens too.

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Despite greater Q2 progress than Germany and Italy, broader worldwide comparisons stay unflattering.

Judged by quarterly progress, the UK economic system remains to be 0.2% smaller than earlier than COVID, whereas Germany, Italy, France and the US have all recovered to above pre-pandemic ranges.

The Resolution Foundation in the meantime calculates that within the final 18 months, UK progress has been the bottom exterior intervals of recession in 65 years – a technical evaluation, however one in line with Mr Hunt’s view that we are stuck in “a low-growth trap”.