(Bloomberg) -- Britain’s economy is enjoying a “Goldilocks moment” with slowing inflation, rising employment and healthy growth that’s likely to set the...
-- Britain’s economy is enjoying a “ Goldilocks moment” with slowing inflation, rising employment and healthy growth that’s likely to set the stage for a more comfortable backdrop both for the Bank of England and Keir Starmer’s government.A strong performance in the second quarter meant the UK enjoyed the best growth in the Group of Seven nations in the first half of 2024, outstripping the US and well ahead of other European countries.
Starmer pledged to “take the brakes off Britain” after his win in the July 4 election, taking early steps to reform planning rules that hold up construction and get people back into jobs after many workers dropped out of the labor market since the pandemic. Jobs data for the three months to June showed the biggest hiring spurt since November, even as regular wage growth cooled to a near two-year low of 5.4%.
That makes more plausible Starmer’s goal of the highest sustained growth among the G-7 nations and his lofty ambition for a 2.5% rise in GDP every year. He and Chancellor of the Exchequer Rachel Reeves are seeking to get the economy growing at the healthier rates seen before the financial crisis, helping to generate more money to pump into struggling public services.
The BOE is skeptical the current pace of growth can last, noting that business surveys suggested that the underlying pace of the economy was weaker than the GDP figures indicate. Bloomberg Economics estimates that the UK’s trend growth — the pace it can expand without generating excess inflation — is around 0.3% per quarter, half the rate seen in the second quarter.
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