What's happened
Recent data indicates a recovery in the UK economy, with GDP growth of 0.6% in Q2 2024, following a recession. Unemployment has decreased to 4.2%, while inflation remains manageable. However, challenges persist, including high economic inactivity and a significant number of workers on zero-hours contracts.
What's behind the headline?
Economic Growth
- GDP increased by 0.6% in Q2 2024, following a 0.7% rise in Q1.
- Growth driven primarily by the service sector, including IT and legal services.
Employment Trends
- Unemployment fell to 4.2%, down from 4.4%.
- However, over 9.5 million people are economically inactive, the highest since 2011.
Inflation and Wages
- Inflation rose slightly to 2.2% in July, with wage growth slowing to 5.4%.
- Real wage growth is now at 2.4%, indicating some relief for households.
Future Outlook
- The Bank of England may consider further interest rate cuts, potentially in November.
- Chancellor Rachel Reeves emphasizes the need for supportive measures in the upcoming Budget to address ongoing employment challenges.
What the papers say
According to the New York Times, the UK economy has shown signs of recovery with a GDP growth of 0.6% in Q2 2024, which is a positive shift after a shallow recession. However, The Mirror highlights ongoing issues, such as high economic inactivity and a significant number of workers on zero-hours contracts, which the Labour government aims to address. BBC News reports a slight decrease in unemployment to 4.2%, but cautions that the jobs market is cooling, with many not actively seeking work. The Telegraph notes that while the unemployment rate has improved, the number of economically inactive individuals has surged, presenting a challenge for the new government. Overall, while there are positive indicators, significant challenges remain for the UK economy.
How we got here
The UK economy faced a shallow recession at the end of 2023, prompting concerns about inflation and employment. Recent data has shown improvements in GDP growth and a decrease in unemployment, providing a more optimistic outlook for the new Labour government under Prime Minister Keir Starmer.
Go deeper
- What are the implications of the GDP growth?
- How is the Labour government addressing unemployment?
- What measures are expected in the upcoming Budget?
More on these topics
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northÂwestern coast of the European mainland.
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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Sir Keir Rodney Starmer KCB QC MP is a British politician and former lawyer who has served as Leader of the Labour Party and Leader of the Opposition since 2020. He has been Member of Parliament for Holborn and St Pancras since 2015.