UK GDP rose 4.8% – business news 12 August 2021

James Salmon, Operations Director.

UK GDP rose 4.8%. How the hot UK labour market is driving interest rate forecasts. US Inflation. Oil Prices. Billionaire pandemic profit tax of 99% urged. Demand eases, but property shortage supports prices.

UK GDP rose 4.8%

The UK economy grew by 4.8% between April and June, according to official figures, as most businesses emerged from lockdown. he Office for National Statistics figures showed that the rise in gross domestic product (GDP) was fueled by retail, restaurants and hotels.

The UK economy is however still  4.4% smaller than it was in the last quarter of 2019, before the covid pandemic hit.

Forecasters are confident that gap will be made up by October and then continue to grow into 2022.

Chancellor Rishi Sunak said: “Today’s figures show that our economy is on the mend, showing strong signs of recovery. I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.”

Although expected with the economy reopening, today’s GDP data was above consensus and is the latest sign of positive growth for the economy. As we continue to focus on economic recovery, it remains critically important that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported; as they will be at the very heart of economic growth as we create an economy fit for the twenty-first century.

How the hot UK labour market is driving interest rate forecasts
The FT reports on how analysts suspect that without a significant cooling of the labour market following the end of furlough, the Bank of England could be forced to increase interest rates as early as next spring.

US Inflation

US Inflation came in higher than expectations in July and is still running above historic levels, according to official figures released today. US inflation hit 5.4% annually in July, the same rate recorded in June, according to the US Bureau of Labor Statistics. Monthly inflation cooled to 0.5% from 0.9% in June.

Oil Prices

Oil Prices dipped below $70 a barrel on Wednesday as the United States urged OPEC and its oil-producing partners to boost output, saying current production was not enough and could threaten the global economic recovery.

Billionaire pandemic profit tax of 99% urged
A report by Oxfam, the Fight Inequality Alliance, the Institute for Policy Studies and the Patriotic Millionaires found a one-off tax of 99% on the pandemic profits of billionaires would raise £4trn. The world’s 2,700 or so billionaires would still be £40bn richer than before the virus struck. Gary Stevenson, of Patriotic Millionaires, said: “A wealth tax is the solution.”

Demand eases, but property shortage supports prices
A report from the Royal Institution of Chartered Surveyors indicates that demand for new homes fell in July for the first time in four months as the stamp duty holiday came to an end. The institute’s gauge for new enquiries reveals a net balance of -9% of agents had experienced an increase in new buyer enquiries during the month, compared with a positive 10% in June. A net balance of -21% of agents reported a rise in agreed sales while a net balance of -46% of respondents expanded their listings last month, compared with -35% in June. Although demand is easing, house prices are being supported by a shortage of properties coming to market with a net balance of 78% of agents registering rising housing prices, down from 82% in June. Simon Rubinsohn, chief economist at RICs observed: “Significantly, a strong message from survey respondents is that buyers are continuing to place a premium on space, with the prospect of a hybrid model of work being adopted by many organisations providing the opportunity for greater flexibility around location. This is being reflected in the challenge some current homeowners are having in moving up the property ladder, as well as in stronger price expectations for larger properties.”

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