UK economy grew unexpectedly after Burnham took over as Prime Minister

In July, the UK economy experienced unexpected growth after Andy Burnham took over as Prime Minister, according to official figures from the Office for National Statistics (ONS). The Gross Domestic Product (GDP) expanded by 0.4 percent, surpassing the City economists' forecast of zero growth. This unexpected growth was primarily driven by the services sector, which accounted for around 80 percent of GDP output.

The services sector expanded by 0.4 percent, with computer programming emerging as the largest contributor, continuing its strong growth throughout the year. This growth was attributed to businesses involved in AI and related technologies. Additionally, production grew by 0.2 percent, while construction expanded by 0.1 percent.

Liz McKeown, director of economic statistics at the ONS, noted that some businesses benefited from the World Cup, while others faced challenges. This growth occurred during the final months of Rachel Reeves' Chancellorship, which ended when Burnham entered Downing Street on July 20. As Burnham and his Chancellor, John Healey, have faced mounting fiscal pressures due to the surge in global borrowing costs, economists have forecast that the £22 billion in fiscal headroom left by Reeves in the 2025 Budget could be halved.

This has put pressure on Healey, who will likely have to hike taxes in his first Budget to stay within the fiscal rules, which mandate that day-to-day spending must match receipts by 2030. Top bosses of Britain's largest industry groups have urged Healey to reduce the cost of business to boost growth across the UK economy before his first Budget.

Healey emphasized his focus on boosting growth "in more places" during his first major speech as Chancellor, promising that the government would keep Labour's 2024 manifesto pledges that ruled out hikes to income tax, VAT, and national insurance. Meanwhile, Jaguar Land Rover, headquartered in Coventry, announced plans to cut thousands of jobs as it seeks to slash around £1.7 billion from its cost base over the next two years.