L adies and gentlemen, a round of applause, please... Britain's economy has delivered another pleasant surprise. And, three months into his premiership, Andy Burnham has been handed an early Christmas present – one that he doesn’t much deserve.
The UK economy grew by 0.7 per cent between July and September, its strongest quarterly performance in more than two years. September alone delivered growth of 0.2 per cent, beating City expectations. That puts Britain second only to the US among the G7 economies that have reported, with Japan's figures still to come.
After growth of 0.6 per cent in the first quarter and 0.5 per cent in the second, even some of the gloomier forecasts for the year are looking unnecessarily pessimistic. So, three cheers for UK plc – and not for Burnham. Here's the awkward thing about these figures: they cover precisely the prime minister's first three months in Downing Street.
And the economy's impressive performance owes precious little to anything he has done differently from his predecessor. Economies are enormous, slow-moving beasts. They don't suddenly change direction because somebody new has moved into No 10, however enthusiastically that person might claim otherwise.
Indeed, the figures suggest that much of the momentum was already there. Burnham inherited an economy that was growing, and it has continued to grow. That's welcome news, but hardly evidence of an economic revolution.
Look beneath the headline numbers and the picture becomes more interesting. Services , which dominate the British economy, expanded by 0.9 per cent. Production managed a modest 0.1 per cent.
Construction, meanwhile, remained the party pooper, shrinking by 0.7 per cent. Housebuilding remains particularly troubling. Burnham's housing secretary, Angela Rayner, has her work cut out if the government is to deliver the homes Britain desperately needs.
But the real star of these figures is artificial intelligence . According to an estimate by Investec, AI-related services contributed 0.2 percentage points of the quarter's 0.7 per cent growth. That's almost a third of the increase, despite those services accounting for just 4 per cent of the economy.
Prime minister Andy Burnham says the new GDP data is ‘welcome news’ (Getty) (Getty) An extraordinary contribution, if the estimate proves accurate. It also raises an uncomfortable question: how broad-based is Britain's economic success? The government will doubtless point to the figures as vindication of its ambition to make Britain an AI superpower.
But the businesses driving this expansion were hardly waiting for Burnham to arrive before getting to work. There are other reasons for caution. Employers are still dealing with higher National Insurance contributions, which have increased the cost of taking on staff.
Fiscal drag continues to pull more workers into higher tax brackets, squeezing disposable incomes even as the economy expands. Household consumption may be growing, but that doesn't mean voters are feeling particularly prosperous. Inflation remains painfully high, and borrowing costs are another concern.
Indeed, here's the sting in the tail for Burnham. Stronger-than-expected growth could give the Bank of England greater confidence that the economy can withstand further interest-rate increases. That's hardly what mortgage holders want to hear.
Nor is it the sort of economic success a prime minister particularly wants to celebrate. The economy has shown remarkable resilience. That deserves recognition, and perhaps even a little optimism.
But Burnham should resist the temptation to claim the credit. He inherited this recovery rather than created it, and the policies that will determine whether it lasts have yet to prove themselves. The first three months have been good for Britain's economy.
The next three will tell us rather more about Andy Burnham.
Source: The Independent
