0:00
crack open the champagne The economy
0:02
grew more than expected in the first
0:04
three months of the year But that's
0:06
growth in the rearview mirror Is there
0:08
any on the horizon welcome to the week
0:10
in business with me Christian May
0:16
If your defining mission in government
0:18
is apparently to generate economic
0:20
growth and if you're nervous about the
0:22
impact of global economic uncertainty
0:24
and weak domestic economic indicators
0:27
you're going to treat a 0.7% uplift in
0:30
GDP as a gift from heaven Even if it was
0:33
lower than the same period last year
0:35
0.9% and even if analysts say the
0:38
figures were boosted by a temporary
0:40
output surge as firms rushed to get
0:42
ahead of Trump's tariffs But even in
0:44
that context the chancellor would be
0:46
entitled to a little glass of bucks fizz
0:48
with her morning quason because in
0:50
febriel times even small numbers can
0:53
have a big impact Rachel Reef said this
0:57
morning that today's growth figures show
0:59
the strength and potential of the UK
1:01
economy and that the government is
1:03
making the right choices in the national
1:05
interest I suppose this depends on where
1:08
you put the bar If economic success is
1:11
judged by not doing as badly as expected
1:14
by relying on businesses soldiering on
1:16
under the weight of new taxes and
1:18
perhaps ultimately scraping 1% annual
1:20
GDP growth then yes Reeves is making a
1:24
success of it Ministers will insist that
1:26
this modest uptick in economic growth
1:28
vindicates their decisions but it's much
1:30
more likely that the economy grew in
1:32
spite of government policies rather than
1:34
because of them Yale Selfin chief
1:37
economist at KPMG warned that the growth
1:39
spurt was said to be short-lived and
1:42
that economic momentum is expected to
1:44
slow significantly over the coming
1:46
quarters due to both domestic and global
1:48
headwinds hampering business activity
1:51
This appears to be a consensus view
1:53
among economists reacting to this
1:55
morning's GDP figures Paul Dales at
1:58
Capital Economics warned that the best
2:00
part of the year may already be behind
2:02
us which is pretty grim when you
2:04
consider we're only in May He added that
2:06
the bumper rise in GDP is unlikely to be
2:08
repeated as a lot of it was due to
2:10
activity being brought forward ahead of
2:12
US tariffs and the rise in domestic
2:14
business taxes here in the UK In other
2:17
words if Reeves looks ahead to the next
2:19
three months she'll probably want to
2:21
limit herself to just the one glass of
2:23
bucks fizz today We know from ONS data
2:26
released this week that the number of
2:28
payrolled employees has fallen by around
2:30
80,000 since the start of the year and
2:32
that employers are nervous about making
2:35
new hires or creating new roles The
2:38
Chartered Institute for Personnel and
2:40
Development revealed on Monday that
2:41
confidence among UK employers has fallen
2:44
to a low only previously seen during the
2:46
pandemic with more than a quarter of
2:48
private sector respondents to their
2:50
survey planning to make redundancies and
2:52
very few planning to expand
2:55
Sentiment surveys also paint a gloomy
2:57
picture though it should be noted that
2:59
businesses and individuals always seem
3:01
to be much more optimistic about their
3:03
own economic prospects than they are of
3:05
the wider economy Make of that what you
3:08
will Meanwhile the government continues
3:10
to push ahead with welcome structural
3:12
reforms And this week two of the
3:14
cabinet's big beasts were out and about
3:17
in the square mile Rachel Reeves was in
3:19
the city hailing the latest move by some
3:21
of the country's biggest pension funds
3:23
to commit to increasing the amount they
3:25
invest in UK private markets and
3:27
infrastructure assets It's a policy that
3:30
looks great on paper Reef said it could
3:32
add 50 billion quid to the UK economy
3:34
over the next few years but the pension
3:36
fund's commitment is so riddled with
3:38
caveats justifiable caveats that it's
3:40
unlikely to move the dial And then
3:43
defense secretary John Healey bowled
3:44
into the London Stock Exchange to unveil
3:46
plans for a new defense marketplace
3:49
aimed at speeding up defense procurement
3:51
and opening new avenues for UK firms to
3:53
get a piece of the action He declared
3:55
that the UK's defense sector is open for
3:58
business And while the motivation for
3:59
this is pretty grim war ministers are
4:02
leaning into the benefits of these
4:04
dangerous times pushing for greater
4:06
investment and innovation in the UK's
4:08
defense sector be that tech or advanced
4:10
manufacturing So in other words life
4:13
goes on GDP figures are backwards
4:15
looking And while that data is gathered
4:17
and assessed ministers are out and about
4:20
trying to move the needle on growth on
4:22
long-term growth And all power to them
4:24
because we'll need to squeeze every
4:26
possible drop of economic growth out of
4:28
our economy if we're to avoid another
4:31
punishing budget in October On that note
4:34
one of the chancellor's most senior
4:35
economic advisers warned yesterday that
4:37
the government will have no choice but
4:39
to raise taxes in the autumn Nick
4:42
Williams who was also in charge of
4:43
Labour's economic policy in opposition
4:45
left Downing Street last month Uh since
4:48
then he said that the current approach
4:49
to the public finances is not credible
4:51
and that taxes will have to go up asked
4:54
about this Treasury Minister Emma
4:56
Reynolds said today that the government
4:58
has no plans to increase taxes on
5:01
individuals which just leaves businesses
5:05
On that note I'll say thanks for
5:07
watching Stay up to date and in the know
5:09
with the city app and on citym.com And
5:11
I'll see you next week
