British economists express skepticism about the ability of the Labor government under the leadership of Keir Starmer to ensure rapid economic growth.
Written by UNN with reference to Bloomberg.
According to a Bloomberg survey of 56 analysts, the UK economy will grow by 0.8% in 2024 and 1.3% in 2025, which is only 0.1 percentage points higher than previous forecasts. According to analysts, Labor is unlikely to raise the long-term prospects for the British economy, even with the more moderate fiscal policy of new Chancellor Rachel Reeves.
The poll underscores the big challenges for the new government as it tries to restore the country's economic growth. Starmer has announced a policy offensive aimed at stimulating the economy, which is critical to funding Labor's promises to improve public services, including schools, hospitals and transportation. Last week, Labor announced changes to the planning system and the creation of a sovereign wealth fund to promote construction and investment. The government also hopes that closer ties with the European Union and political stability will increase business confidence in investment.
Absent a growth miracle like the one the government is targeting, fiscal consolidation may prove challenging. While potential reforms could certainly support medium-term economic growth, our estimate of 1.5% p.a. remains unchanged at this stage
A survey of economists found that only one in nine believes that economic growth will improve after Labor's landslide victory in the July 4 election. The majority of respondents, eight out of eleven, expect a looser fiscal policy than proposed in the party's manifesto. While analysts remain skeptical about Labor's ability to change the long-term economic growth outlook, the current economic recovery may improve their budget plan more than anticipated.
Recent data show that the UK economy grew by 0.4% in May, twice the expected pace. This keeps the UK on track for strong growth in the second quarter, following on from 0.7% GDP growth in the first quarter.Deutsche Bank's chief UK economist, Sanjay Raja, believes that the economic recovery is likely to be better than the Office for Budget Responsibility predicted in its latest estimates in March. However, he warns of a potential deterioration in the fiscal situation, despite strong growth figures.
Recent data and assumptions about market conditions are likely to undermine the previously announced fiscal reserve of the spring budget. With inflation exceeding the fiscal supervisor's forecasts, market rate expectations remain significantly higher than those used in the spring budget
Recall
After the Labor Party's landslide election victory, Keir Starmer officially became the Prime Minister of the United Kingdom , John Healey became the Minister of Defense, and David Lammy became the Minister of Foreign Affairs, who had previously visited Kyiv to reassure their continued support for Ukraine.