Building and Infrastructure Surprises in Q2 Report
In the latest Macro-Economic Modelling and Forecasting analysis, Fergus Jimenez-England, an Associate Economist at the National Institute of Economic and Social Research (NIESR), sheds light on the UK's economic growth prospects.
The second quarter of this year saw a GDP growth of 0.3%, with the services and construction sectors showing stronger-than-expected growth. However, the production and construction sectors continued to contract, contributing to a mixed growth picture.
The forecast for GDP growth in the third quarter has been revised slightly upward to 0.5%, a promising sign after the initial projection of 0.4% last month. Yet, this upward revision must be viewed with caution, as elevated uncertainty among businesses and weak private consumption pose downside risks to the forecast.
The Chancellor is expected to address these concerns by tightening fiscal policy in the Autumn. The necessity of building a substantial fiscal buffer in the Autumn Budget is crucial to avoid uncertainty plaguing growth into next year.
However, speculation over such policy changes is likely to weigh on economic activity in the coming months. This uncertainty, coupled with weak consumer spending, could dampen the expected growth.
For a comprehensive understanding of the UK's economic outlook, the complete forecast can be found in the Summer UK Economic Outlook, published last week. This report is available only to corporate members, NiGEM subscribers, and NIESR partners.
As we move towards the Autumn, it's clear that the UK economy faces challenges. The Chancellor's decisions in the upcoming Budget will play a significant role in shaping the country's economic trajectory in the coming quarters.
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