UK Prime Minister Rishi Sunak has stated that it will take time for people to fully feel the positive effects of the UK emerging from recession, as new data reveals that the UK economy grew by 0.6% between January and March. This represents an improvement on the figures from the second half of last year. Whilst Mr Sunak noted that the UK economy had real momentum, he also admitted that there was still work to be done.
Despite this record, there was little cause for celebration by either the Labour or the Liberal Democrats. Labour’s shadow chancellor, Rachel Reeves, commented that after 14 years of economic chaos, many working people were still worse off. Meanwhile, the Liberal Democrat Treasury spokesperson, Sarah Olney, argued that it was time to call a general election.
The UK economy had previously fallen into recession in 2020, but is now showing signs of progress with Gross domestic product rising by more than expected in the first three months of 2021, with 0.4% growth forecast. Mr Sunak believes that the UK economy finally has some strength behind it, after two years of fast-paced growth.
According to the Prime Minister, the latest figures show that the UK now has momentum. However, Labour disagreed, arguing that it was too early for Conservative ministers to be taking a victory lap and suggesting that they’ve never had it so good. The date for the next election is yet to be determined, but it is expected that the economy will feature highly in the debates.
FTSE 100 index, which closed on a fresh record high following the release of the economy figures, is up 52.41 points or 0.63% at 8,433.76, and has further helped to suggest a positive turnaround in the country’s economy.
Although the Bank of England’s governor, Andrew Bailey, has previously suggested that whilst the UK is seeing a recovery it is not yet a strong one, the bank voted to hold interest rates at a 16-year high of 5.25%. The Bank expects inflation to fall back to its 2% target in the next few months, which has prompted consideration for a possible cut in rates next month. However, these expectations have been dampened by the stronger than anticipated GDP figures.
Looking ahead, the first interest rate cut will potentially be determined by future employment and inflation figures. Mr Sunak, on the other hand, remains optimistic regarding the GDP figures, stating that the UK has the highest growth rate along with Canada in the G7 developed nations. He also added that wages are going up, energy bills are coming down, and taxes are falling thanks to the government’s cut of National Insurance by 4% since late last year
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