UK plc boosted by summer bounce

...but bosses fear damage if Corbyn gets in Number Ten

FEARS of a recession were fading last night after figures revealed the British economy grew by 0.3 per cent in July.

The results pushed the pound to a six-week high against the dollar, as it rose 0.9 per cent to 1.238 dollars.

However firms warned that chaos over Brexit risked ushering in a hardLeft Jeremy Corbyn government – which could hit business.

Richard Walker, managing director of Iceland, said that politicians’ failure to reach a solution more than three years after the Brexit referendum is damaging faith in the system.

‘I do worry about the cynicism that’s creeping in towards politicians because it can chip away at democracy and lead to extreme outcomes,’ he told BBC Radio 4’s Today programme.

‘From a business community perspective I think the big fear is that this chaos backdoors a Corbyn and [John] McDonnell government, who are selfdeclared Marxists.’

His comments came as official figures showed the economy has bounced back. Britain suffered a 0.2 per cent contraction in the three months to June, sparking fears of a prolonged downturn.

But the Office for National Statistics has revealed a recovery in July with monthly growth of 0.3 per cent.

Paul Dales, from consultants Capital Economics, said this points to overall third-quarter growth of 0.2 per cent. He added: ‘Overall the economy is still fairly weak, but it’s not in recession. Political chaos, yes. Economic chaos, no.’

The figures show that construction, manufacturing and services all bounced back in July, raising hopes of a broad recovery. Garry Young, from the National Institute of Economic and Social Research, said: ‘It looks like there has been a welcome resumption of economic growth in the third quarter, roughly offsetting the fall in the second quarter. But it is not clear how long growth will continue.’

The country could still technically fall into recession if growth in the three months from July to September as a whole is negative.

But Sir Charlie Bean, an economist at the Office for Budget Responsibility, told MPs on the Treasury select committee that a steady economic recovery looks likely.

He said: ‘It’s highly unlikely that the third quarter will show another contraction.’ Supermarket boss Mr Walker was expressing fears that are widely held in the City about a possible Labour victory.

If Mr Corbyn becomes prime minister with Mr McDonnell as his chancellor, it is feared the pair would wreck the economy through brutal tax rises and nationalisation.

Experts warn this would send the stock market crashing and wipe billions of pounds from pension funds.

Mr Walker – who voted to leave the EU, but is hoping an exit agreement is reached – also said that a No Deal Brexit would not be as bad as some campaigners claim.

He told Today: ‘What I want is clarity and certainty. It’s the relentless uncertainty that’s crippling business.’

As well as rising against the dollar, the pound also rose 0.8 per cent against the euro yesterday – reaching 1.123 euros.

Fiona Cincotta, from trading firm City Index, said: ‘As the chances of the UK entering recession receded the pound ticked higher.’

‘Clarity and certainty’