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UK economy resumes recovery from recession; 21% increase in water bills is less than water companies asked forConstruction output rebounded in May, today’s ONS figures showed. This week, the new chancellor, Rachel Reeves, unveiled a number of measures aimed at getting “Britain building again”.Clive Docwra, managing director of property and construction consultancy McBains, said:After previous statistics showed the construction sector lagging behind the modest uptick in growth witnessed in other industries, today’s figures are much better than expected.Especially welcome is that growth was experienced across most work sectors, with new housing seeing a 2.8% increase.The result is that overall second-quarter GDP is on track to rise by 0.5-0.6% after 0.7% growth in the first quarter. We’re sceptical that these sort of growth figures can be sustained into the second half of the year, but we expect growth to remain reasonable nevertheless. One important factor is that the impact of past rate hikes has largely taken its course now; we estimate that 80% of the mortgage squeeze is behind us.Does this change the story for the Bank of England? Probably not. Policymakers are still almost exclusively focused on services inflation, and it’s the one remaining release of this data that will determine whether the Bank can cut rates in August. Bank of England chief economist Huw Pill, perhaps unsurprisingly, refused to be drawn on what he thought in comments made yesterday. Continue reading…
UK economy resumes recovery from recession; 21% increase in water bills is less than water companies asked for
Construction output rebounded in May, today’s ONS figures showed. This week, the new chancellor, Rachel Reeves, unveiled a number of measures aimed at getting “Britain building again”.
Clive Docwra, managing director of property and construction consultancy McBains, said:
After previous statistics showed the construction sector lagging behind the modest uptick in growth witnessed in other industries, today’s figures are much better than expected.
Especially welcome is that growth was experienced across most work sectors, with new housing seeing a 2.8% increase.
The result is that overall second-quarter GDP is on track to rise by 0.5-0.6% after 0.7% growth in the first quarter. We’re sceptical that these sort of growth figures can be sustained into the second half of the year, but we expect growth to remain reasonable nevertheless. One important factor is that the impact of past rate hikes has largely taken its course now; we estimate that 80% of the mortgage squeeze is behind us.
Does this change the story for the Bank of England? Probably not. Policymakers are still almost exclusively focused on services inflation, and it’s the one remaining release of this data that will determine whether the Bank can cut rates in August. Bank of England chief economist Huw Pill, perhaps unsurprisingly, refused to be drawn on what he thought in comments made yesterday.
