August 21, 2023: On the positive side, inflation fell from 11% in May to 7% in July as the energy shock that had driven prices higher began to ease. This is still a high level of inflation, but it is a welcome sign that it is starting to come down.
In addition, the unemployment rate fell to 3.8% in the three months to June, its lowest level since 1974. This suggests the labor market is still strong, despite the economic headwinds.
However, there were also some negative signs in the economy this week. The Bank of England raised interest rates for the fifth time in a row to 1.25% to combat inflation. This will likely put further pressure on businesses and households, making it more expensive to borrow money.
In addition, the housing market is starting to show signs of weakness. House prices fell for the third month in July, and there are concerns that the market could be heading for a correction.
Overall, the UK economy is facing several challenges at the moment. Inflation is high, interest rates are rising, and the housing market is slowing down. However, there are also some positive signs, such as the falling unemployment rate. How the economy will perform in the coming months remains to be seen.
Here are some actional and practical takeaways from this news:
The government should focus on boosting productivity and growth by investing in infrastructure and skills training.