Chancellor Jeremy Hunt and others respond to GDP Q2 data 2023

Chancellor of the Exchequer, Jeremy Hunt said:

“The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.

“The Bank of England are now forecasting that we will avoid recession, and if we stick to our plan to help people into work and boost business investment, the IMF have said over the longer-term we will grow faster than Germany, France and Italy.” 

GDP growth of 0.2% means little to low-income families going without essentials

Responding to the latest figures on Gross Domestic Product (GDP) JRF Chief Economist Alfie Stirling says: 

“GDP growth of 0.2% means little to the 7.3 million low-income families who right now are going without essentials like heating, eating and adequate clothing. Even those who aren’t facing immediate hardship are being squeezed from all sides. As interest rates continue to rise, the already eye watering cost of rent, food and energy is being compounded by the rising cost of credit cards, overdrafts, and mortgages.

“For too many people, and too many places, the economy simply isn’t working. There are too few good jobs with rising real pay, too few people have the resources to take risks and try something new, and there is too little investment in the things we all need, both now and for the future.”

Notes to Editor

• 5.7 million low-income households are having to cut down or skip meals because they don’t have enough money for food, while the number going without items such as food, heating or basic toiletries (63%) has remained around 7 million for more than a year https://www.jrf.org.uk/press/no-relief-73-million-going-without-essentials-jrf-responds-cpi-inflation-figures

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  Rachel Reeves MP, Labour's Shadow Chancellor, responding to the latest GDP data, said: 

  “Growth in the economy is still on the floor.

  “13 years of economic mismanagement under the Conservatives has left Britain worse off and trapped in a low growth, high tax cycle.

  “Labour’s plan for the economy will boost growth, increase wages and bring down bills so working people are better off.”

Growth surprises slightly to the upside in Q2 but over the past 18 months has been the weakest for 65 years outside of a recession  

The UK economy grew slightly in Q2, exceeding expectations for flat growth. But the cost of living crisis period remains the weakest outside of a recession for 65 years, the Resolution Foundation said today (Friday) in response to the latest ONS GDP data.

GDP increased by 0.2 per cent in Q2 2023, following a small rise in Q1, with growth in household and government consumption partially offset by a drag from trade. The all-important services sector continued to expand and there were also positive contributions from the manufacturing and production sectors.

But looking back over the cost of living crisis, the UK economy has grown by just 0.4 per cent since the start of 2022. This is the weakest 18 months of growth since the 1950s, lower than other G7 countries except Germany which went into recession earlier this year. During that period the UK has had the highest average inflation among the G7 (9.1 per cent).

So while it’s good news that the UK economy grew slightly in Q2, and has avoided the recession experienced elsewhere, the reality is that the economy continues to stall, with high inflation and rapid increases in interest rates meaning that this period will feel like a recession in all but name to many.

James Smith, Research Director at the Resolution Foundation, said:

“The good news is that the economy grew by 0.2 per cent in Q2, stronger than the flat growth many had expected. This is a continuation of the UK’s relative resilience as we continue to dodge the technical recession experienced elsewhere in the face of the ongoing cost of living crisis.

“But the big picture is that the UK economy has expanded by just 0.7 per cent since the start of 2022 – the weakest growth in 65 years outside of a full-blown recession.

“With the economy continuing to stall, we are far from out of the cost of living crisis woods yet. Such weak growth will feel like a recession to many as families struggle with the ever-rising cost of essentials and higher mortgage repayments.”