IEA economist responds to latest GDP figures
11 February 2022
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Press Release
In the Media
Christopher Snowdon quoted in the Daily Mail
14 February 2022
Economic Theory
11 November 2024
Commenting on the latest GDP data from the Office for National Statistics, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:
“The latest UK GDP figures are largely old news, but still good news. The strong growth in 2021 means that individuals and companies are already paying more tax than expected, and lower government borrowing means that the Chancellor doesn’t need to add even more to their burden.
“Economic growth of 7.5 per cent in 2021 needs be seen in the context of the 9.4 per cent slump in 2020. Nonetheless, it was still far stronger than most had expected at the start of last year, when the consensus was only 4 or 4.5 per cent.
“The monthly fall of 0.2 per cent in December was also smaller than feared. Activity might have dipped further in January, but the UK economy at least began 2022 in better shape than many had expected. Indeed, the Bank of England’s forecasts published on 3rd February are already looking too pessimistic.
“However, this might just be a last hurrah before the recovery is snuffed out by a combination of higher inflation and tax hikes. The level of economic activity has only just returned to where it was before the pandemic struck, and the total number of people in work is still lower.
“There is never a good time to raise taxes, but now is terrible. More may also still need to be done to help low-income households struggling with their energy bills.”
“The latest UK GDP figures are largely old news, but still good news. The strong growth in 2021 means that individuals and companies are already paying more tax than expected, and lower government borrowing means that the Chancellor doesn’t need to add even more to their burden.
“Economic growth of 7.5 per cent in 2021 needs be seen in the context of the 9.4 per cent slump in 2020. Nonetheless, it was still far stronger than most had expected at the start of last year, when the consensus was only 4 or 4.5 per cent.
“The monthly fall of 0.2 per cent in December was also smaller than feared. Activity might have dipped further in January, but the UK economy at least began 2022 in better shape than many had expected. Indeed, the Bank of England’s forecasts published on 3rd February are already looking too pessimistic.
“However, this might just be a last hurrah before the recovery is snuffed out by a combination of higher inflation and tax hikes. The level of economic activity has only just returned to where it was before the pandemic struck, and the total number of people in work is still lower.
“There is never a good time to raise taxes, but now is terrible. More may also still need to be done to help low-income households struggling with their energy bills.”
ENDSNotes to editors
Contact: Annabel Denham, Director of Communications, 07540 770 774
IEA spokespeople are available for interview and further comment.
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