Kate Andrews

There was no economic growth in July, according to the Office for National Statistics. The latest GDP figures show that a boost in services output – 0.1 per cent – was offset by a tumble in production and construction output – 0.8 per cent and 0.4 per cent, respectively – leading to no overall growth in the month of the election.  It’s surprisingly bad news, as markets had expected a modest 0.2 per cent increase in July. Instead, Britain had two consecutive months of no growth.  There is also growing concern that the improvement in services output in July won’t necessarily carry into the latter half of the summer. The rebound in retail sales and the reduction in strike days could take a turn for the worse.

The UK still looks set to get another interest rate cut (or two) by the end of the year, but is that now the main indicator of a healthy labour market? This morning’s update from the Office for National Statistics shows average wage growth slowed to 4 per cent in the three months leading up to July. Wage growth is still outpacing inflation, but it is moving in the right direction – for the Bank of England anyway, which is watching closely to see if its first rate cut is going to have any major impact on wages, risking a secondary round of inflation spikes. Adjusting for inflation, overall wages are up 1.1 per cent on the year, which should give the BoE room for another rate cut this autumn and even possibly at its last meeting in December.

Labour may not have been forthcoming about most of their tax and spend plans during the election. But on one topic the party was crystal clear: a Labour government would beef up the nanny state. Politicians weren’t shy about this. It was Wes Streeting’s idea to adopt New Zealand’s (now abandoned) plans for a generational smoking ban, picked up months later by Rishi Sunak. Keir Starmer kicked off the year embracing the nanny state, saying he was ‘up for that fight’.  It’s no surprise then that health campaigners and groups are flocking towards new government aides to discuss what can be taxed or banned next.

Liz Truss continues to do a lot of heavy lifting for the Labour party. The former prime minister’s mini-Budget featured more in the election – as a Labour talking point – than any piece of policy implemented by Rishi Sunak. Chancellor Rachel Reeves is determined to present the next round of spending cuts and tax hikes as an extension of Tory policy, rather than the start of Labour policy. The narrative that, under Truss, the Tories ‘crashed the economy’ is part of what’s being used to justify all the ‘tough decisions’ Labour has coming up in its first Budget at the end of October. The perceived wisdom of what the mini-Budget did to the economy is crucial for pointing the blame.