UK Gross Domestic Product

Pat McFadden Excerpts

Monday 13th June 2022 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on today’s GDP figures.

[The Economic Secretary to the Treasury (John Glen)]

Like other advanced economies, the UK is affected by global economic challenges, including the unprovoked Russian invasion of Ukraine. As the Chancellor said a few weeks ago,

“A perfect storm of global supply shocks is rolling through our economy simultaneously.”

At the same time, the impact from the wind-down of the national covid testing scheme is dragging on UK GDP data. Overall, the figures for April, published by the Office for National Statistics this morning, show that output fell by 0.3% on the month, with the services sector falling by 0.2%, and production and construction declining by 0.6% and 0.4% respectively. As the ONS notes, the fall in GDP on the month is driven by the impact of the wind-down of the NHS covid testing programme. Testing volumes fell by 70% from March to April, which, alongside the impact from vaccines, detracted 0.5 percentage points from GDP growth in April. Looking through the impact of falling tests, we see that the rest of the economy actually grew by 0.1%. Importantly, GDP is still 0.9% above pre-pandemic levels, and support provided over the past two years has put the UK economy in a good position to deal with any economic headwinds, with record numbers of employees on payrolls and a strong economic recovery from the pandemic.

As the Chancellor has also said:

“The next few months will be tough. But where we can act, we will.”

The Government are taking significant action to support households this year, having announced an additional £15 billion of further support for households just over a fortnight ago, on top of the £22 billion announced at the spring statement. In the longer term, the Chancellor has set out his vision for a lower tax, higher growth, higher productivity economy based on the three pillars of capital, people and ideas. The plan for growth and the tax plan represent an ambitious strategy for boosting growth and productivity in the years ahead. The Government’s priority going forward is to put those into effect, including through significant investment in infrastructure, skills and innovation.

We will of course keep the data under close review, and that includes monitoring the economic impact of Russia’s illegal invasion of Ukraine, but our focus will continue to be on the best solution for all: a growing economy that supports high-wage, high-skilled jobs.

[Mr McFadden]

I am grateful to the Minister for his response. GDP down 0.3% in April. A fall of 0.1% in March. Services down 0.3%. Production down 0.6%. Construction down 0.4%. Inflation at 9%. Tax promises broken. The trade deficit at £24 billion. The pound falling against the dollar. The director general of the CBI saying business leaders are “in despair”. The OECD forecasting that, next year, the UK will have the lowest growth of any G20 economy, with the sole exception of—Russia.

That is what the Government are presiding over. Britain is going backwards under the Conservatives. Our businesses, universities and people are all great, but they do not have the partner they need in this Government. The chaos is affecting more and more areas of life: passports, driving licences, GP appointments, A&E waiting times, airports and delays in court trials. Time after time what we used to take for granted is now another feature of Boris Johnson’s backlog Britain.

Those on the Government Benches had a chance to change direction last week. They had a chance to install new leadership that might have given us some hope of a greater sense of grip on all this. But what did they do? They decided that the best person to turn the economy round, to sort out the chaos and the backlogs, and to bring the qualities of focus, attention to detail and sustained delivery to these matters was the current Prime Minister. That was the judgment they made.

The question for the Minister today is simple: after making that judgment—I do not know what he did, but that was the collective judgment—and choosing to continue with the leadership that brought us here, what will the Government do now to turn matters around, and why on earth should anyone believe that the result will be different from what went before?

[John Glen]

As ever, I am grateful to the right hon. Gentleman for his remarks. I do not accept his characterisation of the situation. What I said in my response to him was that today’s data point can be explained by the specific impact of the rapid fall-off in the testing programme. Mass testing ended on 1 April, and that constituted 0.5% of headline growth. We have also seen the impact of the Russian invasion and the impact on the supply chain across the economy. Many economies across the G7 are experiencing a significant impact on their economies and their level of growth.

The Chancellor has been clear in his long-term plan for growth and in his Mais lecture that the Government are committed to investing in research and development, investing in infrastructure and looking at how we can adjust the fiscal burden for business, in particular, to enable that growth to happen. Of course, in subsequent fiscal events, those options remain open to him.