Some comments on this morning's GDP data... The UK economy was still holding up better than most had expected in July, but this may just be the calm before the next storm. The recent strength in services partly reflects some tailwinds that are already fading, including the initial boost to consumer spending from the hot weather. The persistent weakness of the construction sector confirms that the government has yet to “fix the foundations”. Other tailwinds may last longer, notably the surge in spending on AI-related goods and services. This goes some way towards explaining the recent improvements in some of the productivity data. Unfortunately, any good news from two months ago is now being blown away by the fresh headwinds coming from energy prices and the bond markets. The UK economy is still lurching from crisis to crisis. The surge in the cost of government borrowing will heap more pressure on the Chancellor, who is far more likely to respond by raising taxes further than by cutting spending. It is also hard to see how the Bank of England can continue to keep official interest rates on hold when inflation is set to rise further above target. The government needs a much bolder strategy to boost growth by freeing up the supply side of the economy, rather than adding to the burdens of tax and regulation. John Healey did say some of the right things in his "Growth Speech" on Monday, but the gap between rhetoric and reality seems as wide as ever.