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Gross domestic product (GDP) grew by 0.5% in May 2022, after a decline of 0.2% in April 2022, according to the latest Office for National Statistics (ONS) figures
Services output grew by 0.4% in May 2022 and was the largest contributor to GDP growth as health and social work activities grew by 2.1%, mainly because of a large rise in GP appointments, which offset the continued scaling down of the NHS Test and Trace and Covid-19 vaccination programmes.
Ben Jones, CBI lead economist, said: ‘Economic growth in May was stronger than expected. However, GDP data is volatile at the moment.
‘This is in part due to the impact of the Jubilee bank holidays, and this noise will continue to obscure the true state of the economy over the next few months. In reality, CBI surveys and real-time data point to subdued economic momentum.
‘The priority of the next Prime Minister must be getting the economy growing again. Tax policy is an important part of this, but we need tax changes that drive investment rather than fuel inflation.
‘Yet growth policy is about more than this and concerns the policies of virtually every department. Only a broad plan can be effective.’
ACCA is warning that SMEs are being hard hit by the tough economic conditions.
Glenn Collins, interim head of ACCA UK, said: ‘The resignation of Boris Johnson has left many questioning what lies ahead for businesses and SMEs in particular, putting many critical decisions on hold at a crucial time for the economy.
‘Our recent research has shown that SMEs are struggling under the weight of current economic and financial pressures with over a third of businesses reporting worsened mental health conditions. As support measures have ended (including the recovery loan scheme (RLS) at the end of June) it is vital that the government doesn’t forget its obligations to this sector.
‘We need to eliminate rather than create uncertainty to support our SMEs. Unfortunately, there is currently no clear support plan and the current government turmoil only looks to prolong this. SMEs are the backbone of the UK economy and unless further measures are announced we are set to see this pressure rise and mental health plummet.’
There are concerns that the economy could still fall into recession.
Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown said: ‘It will take something strong to fully reverse fears the UK’s heading towards a recession in the coming year. Frankly, until there is a clear path out from political turmoil, the energy crisis, cost-of-living squeeze and the UK’s far-reaching productivity problems, it’s hard to see where the economy will find its take-off point.’
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