Lord Leigh of Hurley
To ask His Majesty’s Government what assessment they have made of the growth figures for July 2025.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, UK GDP grew by 0.2% in the three months to July 2025, following an increase of 0.3% in the three months to June. Overall, the economy grew by 1% in the first half of this year, well above the OBR forecast of 0.6%. This means the UK was the fastest-growing economy in the G7 over this period. Of course, we want to go further, which is why economic growth remains the Government’s number one priority.
Lord Leigh of Hurley (Con)
Indeed it is, but the ONS said that there is zero growth in GDP. Of course, that means that GDP per capita will be negative, partly because productive people are leaving and less productive people are arriving. The markets have made their view of our economy clear, as our borrowing rates are higher than in any other country in the G7. Will the Minister agree to meet the Growth Commission, which has some excellent ideas on growth? As Treasury Minister, will he persuade his new colleagues of what every employer is saying, that the Employment Rights Bill will severely curtail growth? Now is the time to amend it.
Lord Livermore (Lab)
I am very grateful to the noble Lord for his question and for his thoughts on growing the economy. After his success in advocating for a Brexit deal that reduced GDP by 4%, it is always very helpful to get his advice on economic growth.
The noble Lord mentioned the monthly growth figures. I do not know whether he is an avid reader of the Office for National Statistics blog posts, but he may have seen that the ONS announced this week that it will be reverting to leading with the three-monthly growth figures, which are less volatile and provide a clearer picture of underlying economic momentum. He may therefore have seen that UK GDP increased in the three months to July. In that data released, we can see that the Government’s action to turn around the legacy of underinvestment from his Government, opposed now by the party opposite, is having an effect, and construction output increased by 0.6%, driven by 2.1% growth in new infrastructure work.
The noble Lord may also have seen that exports to the US increased in July. He may have seen that the UK economy grew by 1% in the first half of this year, and that as a result, the UK is the fastest-growing economy in the G7. He may have seen Lloyds Bank’s latest business barometer, which shows that business confidence rose for the fourth consecutive month to its highest level in 10 years.
Lord Fox (LD)
My Lords, 50% of the economy is small and medium-sized businesses. In its commentary on today’s rise in unemployment and fall in vacancies, the British Chambers of Commerce highlighted employment costs; in particular, it singled out the hike in employers’ national insurance. Earlier today, those noble Lords who were in Prayers prayed for the wealth and tranquillity of our nation. Rather than wait for divine intervention, can the Minister now admit that the national insurance rise was wrong, and it is contributing to neither wealth nor tranquillity in this country?
Lord Livermore (Lab)
It is a welcome return for the noble Lord and a pleasure to be asked a question by him again after a somewhat lengthy absence. The answer to his question is no. We heard from the Liberal Democrat Benches strong support for the investment we announced in the spending review. They supported— I think—every single piece of regional, transport, health, and education investment right across the board. Not a single piece of investment that we announced did they oppose, but they are now saying that they oppose the way in which we raise that money. That, I am afraid, is something we see on many Liberal Democrat leaflets across the country. It is also the route that led to the Liz Truss mini-Budget, wanting to support outcomes but not supporting the difficult measures to support those outcomes.
The noble Lord mentioned small business. We set out a very clear small business strategy to support small businesses in this country.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, the Minister confirmed that growth in the United Kingdom in the first half of this year was the highest of all the G7 countries. Does he agree that those opposite who question and challenge this are talking Britain down and playing into the hands of the people who were on the streets at the weekend undermining parliamentary democracy?
Lord Livermore (Lab)
I certainly agree with the first half of my noble friend’s question. It is important to restate that the UK is the fastest-growing economy in the G7. The economy grew by 1% in the first half of this year, well above the OBR’s forecast of 0.6%. It is also worth drawing attention, as I did, to Lloyds’ latest business barometer, which shows business confidence rising for the fourth consecutive month. It is now at the highest level since 2015. UK firms remain optimistic about their own trading prospects, and firms remain upbeat about their business activity over the next 12 months.
Baroness Neville-Rolfe (Con)
My Lords, this is a different world. Given that the economy is actually struggling to gain momentum, as every serious economic commentator is saying, thanks to the Government’s disastrous tax and regulatory policies, will the Minister answer my noble friend Lord Leigh’s questions? Will the Minister think again on the Employment Rights Bill, conveniently now coming back to the House? Will he answer my noble friend’s very good question on per capita growth, which, as the Minister and I have often agreed, is the key to success?
Lord Livermore (Lab)
The answer to the first of the noble Baroness’s questions is no. As for the second question, she says she is interested in growth but let us look at just one measure that we are taking. Our planning reforms have the largest impact on growth of any non-fiscal measure the OBR has ever scored. Yet her party, evening after evening in this place, is doing every single thing it possibly can to hold up and obstruct our planning Bill in your Lordships’ House. Is that the action of a party that wants to grow the economy? Our capital spending increases economic growth. In this month’s GDP figures, we can see the effect it is having on driving new infrastructure work. Yet her party opposes the changes to the fiscal rules that make that possible. She says she wants growth but at every single turn, she opposes the measures this Government are taking to get that growth.
Lord Sikka (Lab)
My Lords, people’s inability to buy goods and services is a major reason for low economic growth, and 14 years of Conservative rule delivered real wage cuts, the two-child benefit cap, frozen income thresholds, and unchecked profiteering. Some 16 million people live below the poverty line. What plans do the Government have to abandon Conservative policies and deliver redistribution of income and wealth, and curbs on profiteering?
Lord Livermore (Lab)
My noble friend is absolutely correct to say that we need a different approach to the economy from the one we had over the past 14 years, and he will have seen how we are delivering on that. He will know that living standards are forecast to grow over four times faster than in the previous Parliament, and real wages have already grown by more in the first 10 months of this Government than in the first 10 years of the previous Conservative Government. He will know that, in answer to the question opposite, GDP per capita is forecast to rise by 5.6% over this Parliament. Under the last Labour Government, productivity growth was the second fastest in the G7. Under the Tories, it fell to the second slowest in the G7.
Earl Russell (LD)
My Lords, does the Minister agree with the new chair of the Climate Change Committee, who warned today that any weakening or changing of our environmental policies would spook the markets and undermine growth?
Lord Livermore (Lab)
The noble Lord referred to “our” policies. I am pleased that he agrees with our policies. Absolutely, we are committed to delivering net zero in the way that we have set out.
Lord Hintze (Con)
My Lords, what analysis has been done between tax rates and the growth rate? Ignoring that ignores the effects of the Scully curve and crowding out in the economy.
Lord Livermore (Lab)
The points the noble Lord makes are perfectly fair. Obviously, the Chancellor has to balance at any fiscal event the importance of fiscal responsibility and sustainability and the need to grow the economy. She will do so in the forthcoming Budget in the way that she always does.
Lord Bethell (Con)
I will always be grateful to the Minister for his historic observations about GDP per capita. But what is the current GDP per capita, and how is its growth developing over time? Will the Minister please acknowledge that efforts on these Benches on the planning Bill are constructive, supportive and well within the bounds of reasonable parliamentary scrutiny?
Lord Livermore (Lab)
I do not think the noble Lord’s comments about the planning Bill would stand up to a moment’s scrutiny in the outside world. In answer to his specific question, GDP per capita is forecast by the OBR to rise by 5.6% over the course of this Parliament.
Baroness Bousted (Lab)
Will my noble friend the Minister note that since the election interest rates have been cut five times? Will he also agree that this Government are not going to be lectured by an Opposition who, when in government, presided over the longest period of wage stagnation since the Napoleonic Wars, with real wages not returning to pre-2008 levels until 2025?
Lord Livermore (Lab)
My noble friend is absolutely right. The last Conservative Government saw historic mistakes made over austerity, the Brexit deal and the Liz Truss mini-Budget. The consequences of those for working people were very real. Living standards are forecast to grow, as I have said, over four times faster during this Parliament than they did in the previous Parliament.