Danni Hewson, AJ Bell head of financial analysis comments on the latest UK GDP figures.
She said: “Which Chancellor wouldn’t want Premier League players on their team? Jeremey Hunt will doubtless be rather relieved that the return of topflight football has helped give the UK economy a much-needed boost. With matches back on the schedule in January the service sector took off, boosted by post-match pie and pea suppers washed down with a couple of pints.
“Figures from the retail sector have already revealed that Brits chose to put off some of their Christmas spending in order to take advantage of those new year sales. Kids were back in school, postal workers were back on their routes and life switched up a gear after a holiday lull.
“But there are a few things to note in the good news delivered by the service sector. The first is the uptick in the number of people turning to private health services. A mixture of NHS strikes and post-covid backlogs have pushed some people to shell out for health care they would normally expect to get for free. Whilst many of those people would have been able to use pent up savings or just fund it from their incomes, there will be others for whom the cost would have been hard to swallow.
“And despite an overall positive picture there was a drop in real estate activity as uncertainty about future rate rises, the affordability of mortgage payments and the cooling housing market put potential buyers off making decisions until the fog clears.
“That uncertainty was also played out in the construction sector with housebuilding down and infrastructure projects popped onto backburners. Uncertainty isn’t good for business and with costs still elevated many developments are being reined in, reconfigured or written off altogether.
“With every news outlet full of speculation about the upcoming budget, the leaks springing from the treasury suggests they need a good a plumber. Today’s positive update might appear to provide a backdrop for the Chancellor to deliver a bit more by way of tax cuts and spending commitments but in reality, things are flatlining.
“The economy is stuck in exactly the same place it was last year and without growth it is difficult to see how Jeremy Hunt can afford to fund long-term promises. It’s a conundrum for the ages – without growth there is no money to spend but without spending there might not be any growth.”
