By Andy Bruce <\/p>\n
MANCHESTER, England, Aug 21 (Reuters) – Britain is showing surprising signs of strength among businesses and consumers, in an early boost for new Prime Minister Andy Burnham, despite the country’s vulnerability to high inflation stemming from the Iran war. <\/p>\n
A closely watched business survey on \u200cFriday showed the services sector \u2014 the engine of the economy \u2014 recorded its best growth in six months, confounding expectations for a slowdown in a \u200cReuters poll of economists. <\/p>\n
Another report showed consumer confidence hitting a two-year high this month. <\/p>\n
While economists still think Britain faces big challenges in the months ahead \u2014 its public finances remain strained and borrowing costs \u200bcould increase further \u2014 the recent data nonetheless represent a boon for Burnham and for finance minister John Healey ahead of his first budget in October. <\/p>\n
“If we’re not careful, we might have to stop talking about resilience and actually start talking about a reasonable economic performance this year,” said Thomas Pugh, chief economist at tax and consultancy firm RSM. <\/p>\n
ECONOMIC GROWTH AND BUSINESS SENTIMENT IMPROVE <\/p>\n
Britain’s economy expanded by 0.3% in June and 0.4% over the second quarter as a whole, led by the services sector. <\/p>\n
It put Britain \u200con track for the fastest growth among the Group of \u2060Seven advanced economies for the first half of this year, although some economists think this may reflect an inadequate seasonal adjustment \u2014 which, if borne out, would drag on growth in the second half of the year. <\/p>\n
The Office for National Statistics noted strong \u2060investment in tech equipment and growth in industries associated with the AI boom, a sign that the impact of this in Britain is starting to become visible in the hard data. <\/p>\n
On Friday the S&P Global Purchasing Managers’ Index for the services sector rose to a six-month high of 52.8, up from 52.1 in July and above all forecasts in \u200bthe Reuters \u200bpoll of economists. <\/p>\n
The Confederation of British Industry’s gauge of monthly manufacturing order books rose to \u200bits highest level since November 2024, bolstered by the strongest \u200cexport orders in four years. <\/p>\n
CONSUMERS GROW MORE OPTIMISTIC <\/p>\n
Market research firm GfK said its consumer confidence index rose to -14 in August from -17 in July and its gauge of major purchase sentiment increased to its highest since December 2021. <\/p>\n
Other similar surveys from YouGov\/Cebr, BRC-Opinium, Barclays and LSEG\/Ipsos have all shown an improving mood in British households over the last month. <\/p>\n
And while official data on Friday showed a 0.9% drop in retail sales volumes excluding automotive fuels in July, it followed a period of strong growth. <\/p>\n
In the three months to July they were 4% higher than a year previously \u2014 the strongest growth on this measure in five years. <\/p>\n
INFLATION, PUBLIC FINANCES REMAIN FLIES \u200cIN THE OINTMENT <\/p>\n
The biggest risks to Healey as he prepares his budget are still inflation \u200band the state of the public finances, which are inextricably linked as worries about persistent price \u200brises have pushed the cost of new government borrowing in most advanced \u200beconomies to near their highest in decades. <\/p>\n
Consumer price growth looks almost certain to head past 3% in the coming months, and with \u200cno end in sight to the U.S.-Israeli war on Iran \u200bit remains to be seen how much \u200bfurther global energy prices can rise. <\/p>\n
Friday’s PMI surveys showed a pickup in gauges of corporate price pressures. <\/p>\n
Britain’s government recorded an unexpected budget deficit last month, according to data on Friday that showed government spending linked to inflation \u2014 such as staff costs \u2014 had counteracted strong inflows of income tax receipts. <\/p>\n
Borrowing for \u200bthe first four months of the 2026\/27 financial year \u200cis a couple of billion pounds higher than projected by the official budget forecaster, but that picture could change. <\/p>\n
The ONS has revised down \u200bits estimates for public sector net borrowing compared with the initial reading in every month this calendar year. <\/p>\n
Borrowing in May and June \u200bhas been revised down by \u00a37.5 billion combined. <\/p>\n
(Reporting by Andy Bruce; Editing by Hugh Lawson) <\/p>\n","protected":false},"excerpt":{"rendered":"By Andy Bruce MANCHESTER, England, Aug 21 (Reuters) – Britain is showing surprising signs of strength among businesses…\n","protected":false},"author":2,"featured_media":745694,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[19306,2307,84,23815,1294,1805,62058,56,54,55],"class_list":["post-745693","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-andy-burnham","tag-britain","tag-business","tag-economists","tag-economy","tag-john-healey","tag-public-finances","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/745693","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=745693"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/745693\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/745694"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=745693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=745693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=745693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}