Recession worries are a thing of the past as gross domestic product (GDP) – the measure of the UK economy’s size – increased by 0.2 percent in the second quarter of the year.
Growth was buoyed by a 0.5 percent uptick in June, when the food and beverages sector dined out on the heatwave, following a May dip attributed to the extra bank holiday for the King’s coronation.
The Office for National Statistics (ONS) highlighted the car manufacturing industry’s contribution to the forecast-defying results, as the UK looks on track to smash last year’s total production by at least 100,000.
Director of economic statistics Dan Morgan hailed a “particularly strong month” for manufacturing, which grew by 1.6 percent, mainly thanks to the production of motor vehicles, trailers and semi-trailers.
The news comes as a relief to the Government, as it struggles to live up to its pledges to bring down inflation, NHS waiting lists and illegal Channel crossings.
Transport equipment’s contribution to manufacturing growth grew by 0.91 percent between the first and second quarters of the year, with pharmaceutical products in a distant second place with 0.25 percent.
According to the Society of Motor Manufacturers and Traders (SMMT), UK car manufacturing in June was 16.2 percent higher than the same month last year.
After a shortage of imported computer chips during the pandemic, demand vastly outstripped the sector’s capacity. Production has now recovered and manufacturers are bearing down on the backlog of orders.
For the first six months of the year, the number of cars assembled in the UK is up 11.7 percent on 2022 in a huge post-Brexit resurgence for the industry.
The SMMT’s latest industry factsheet claims some 780,000 people in the UK are employed in the wider automotive sector. Over 25 carmakers – including Aston Martin, Ford, Jaguar and BMW – build in excess of 70 different models in the country.
Exports of cars account for 10 percent of the UK’s total, with 132 countries buying British-made vehicles, generating £77billion of annual trade.
In 2022 some 775,014 cars, 101,600 commercial vehicles and 1.5 million engines were built in the UK. If the current pace persists, up to 900,000 could roll off UK production lines this year.
Chancellor Jeremy Hunt said: “The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.”
The Bank of England (BoE) now predicts the UK will avoid recession in 2023, but claimed the economy is likely to flatline for the next few years. Mr Hunt, however, leant on the IMF’s forecast that over the long-term UK GDP would “grow faster than Germany, France and Italy”.
Nonetheless, the economy remains 0.2 percent smaller than it was in the three months leading up to the pandemic, when lockdowns triggered the sharpest recession in UK history
The Shadow Chancellor, Labour’s Rachel Reeves, said: “Growth in the economy is still on the floor. Thirteen years of economic mismanagement under the Conservatives has left Britain worse off and trapped in a low growth, high tax cycle.”