Growth again in July: is the UK economy really ‘turning the corner’?

Emeritus Professor Joe Nellis is Head of Economic Research at MHA, the accountancy and advisory firm

Against expectations, the UK economy is continuing to grow, with GDP up by 0.4% in July following a strong 0.3% increase in June.

The first half of 2026 has given cause for optimism. Consequently, the new Chancellor, John Healey, seized the opportunity earlier this week to suggest that the economy is beginning to ‘turn the corner’ based on a growth in economic output of 0.6% in the first quarter, followed by 0.4% growth in the second quarter.

With the Autumn Budget on the horizon, it is important now that the Chancellor refrains from any significant tax increases on businesses that would counteract these recent gains and put the brakes on growth.

A slowdown in growth would have implications for tax revenues and put more pressure on government finances at a time when UK bond yields have continued to rise and are the highest amongst the G7 countries. John Healey will have to deal with an increasingly difficult balancing act as he strives to maintain the fiscal rules and fiscal credibility – while at the same time avoiding changes to taxes which could damage business confidence.

The economy has displayed resilience in recent months, and there is a ray of hope that the worst may be over. But it is vital that the government converts a short-term boost into long-term, sustainable growth.

It is crucial that the next Budget gives businesses a compelling reason to invest in the future and for the economy to really ‘turn the corner’.