I had almost forgotten what it feels like to be pleasantly surprised by UK economic data.
So the 0.5% pick up in GDP in June was a real tonic on a Friday morning.
By many measures the good ship UK plc is proving a remarkably sea-worthy vessel considering the storms it has sailed through.
But as ever there is a sting in the tail. Any numbers that point to frothier than expected economic activity immediately put pressure on the Bank of England to, in the immortal words of former Federal Reserve chairman William McChesney Martin, take the punchbowl away from the party through more interest rate pain.
All eyes now turn to the inflation data next week. The big drop in the Ofcom cap on average energy bills to £2074 — crucially well below the Government’s £2500 energy price guarantee — at the start of July should carve a big chunk out of the CPI.
With luck it will subside close to 7%. The risk is that any disappointment on inflation will have a disproportionate impact on the sentiment of investors. The mortgage markets have been far calmer in recent weeks with average fixed rates drifting slightly down.
With perhaps fewer than half the homeowners on lowball fixes yet to have remortgaged, the last thing that we need is another spike in gilt yields going into the autumn.
We are now not much more than a year away from a General Election, and though the country has so far avoided the doom scenarios of a recession and a housing crash, there is precious little on the economic horizon to get excited about.
So enjoy the elicit frisson from June’s heady 0.5% growth while it lasts.
The impact of rotten weather and higher mortgage rates are likely to prove a sobering reality check when ONS mainframe spits out the July GDP number in a month’s time
