Economy grows by 1.1%
Share
The UK economy grew by 1.1% in Q2 2010 jumping by 0.8% from Q1, reports the Office of National Statistics.
The GDP figure for April to June was almost double the 0.6% predicted by economists and far higher than the 0.3% for the first three months of the year.
The report says the increase was mainly due to a boost in business services and finance and construction.
Output of the service industries increased 0.9% and the production industries increased 1%.
GDP increased 1.6% compared with Q2 2009 but Capital Economics doubts that the trend can continue.
Jonathan Loynes, chief European economist at Capital Economics, says: “Q2’s much stronger than expected rise in UK GDP is a pleasant surprise, but is likely to prove as good as it gets as far as the pace of economic recovery is concerned.
“The Q2 figures suggest that growth in 2010 overall may now be closer to 1.5% than the 1.0% we previously expected. But two reasons not to get too over-excited. First, while strong by any ordinary standards, Q2’s gain in GDP is less impressive in the light of the sharp falls seen during the recession. There were two quarters when GDP fell by more than 2% and activity is still over 4% below its Q1 2008 level.
“And second, with recent business surveys weakening and the fiscal squeeze looming, Q2 looks very likely to be the peak in terms of the pace of growth – expect a much weaker second half. Accordingly, there is nothing here to prompt the Monetary Policy Committee to start to put the brakes on the economy.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
Readers' comments (3)
John Tidswell | 23 Jul 2010 11:33 am
It always amuses me how the glass half empty pesimists seem to get more of airing than the majority of people who are starting to feel as though the worst is over and are celebrating the fact that the much better than expected GDP figures are good for us all. Long may it continue.
Unsuitable or offensive? Report this comment
Bill Wells | 23 Jul 2010 12:04 pm
I understand Mr Tidswell's comment about the pessimists. But, living in a police state, where only the politicians, villains and bankers thrive whilst the rest of us are being fed dodgy statistics and simultaneously being ripped off, its hard not to be a pessimist.
Unsuitable or offensive? Report this comment
Stephen Rodley | 23 Jul 2010 12:48 pm
I have stopped watching the news for the simple reason that for EVERY news item a bad spin is put on it!
We need confidence back in the country to get people spending again so the economy can kick-start. But every time these jokers offer a pessimistic view, even more damage is done!
Unsuitable or offensive? Report this comment