GDP growth boost: is Britain's economic recovery finally on?
Second quarter growth figure has been revised upwards by ONS - and it looks sustainable
THE UK economy grew more rapidly in the second quarter of this year than was originally thought, the Office of National Statistics announced today. It revised its first estimate of 0.6 per cent up to 0.7 per cent, prompting claims that a recovery is now well and truly underway.
The ONS announcement did not come as a surprise to analysts but is seen as more evidence that the country is bouncing back from a five-year slump. The figures show that GDP in the second quarter was 1.5 per cent higher than for the same period last year, while the 0.7 per cent increase is the best since the third quarter of last year, when the economy was enjoying an Olympic glow.
This time the figures appear to be sustainable, and are not just fueled by increased household spending, economist Chris Williamson tells The Guardian. "Exports and business investment were key drivers of the expansion, pointing to a rebalancing of the economy away from domestic consumption," he says.
That has helped dispel fears that Britain was "in an unsustainable 'Alice in Wongaland' recovery, too dependent on consumer spending," says the paper.
The revised data shows that all four major sectors of the economy - services, industry, agriculture and construction - expanded.
The Daily Telegraph welcomes the news. "The figures provide further evidence that after years of poor performance, the economy is finally starting to pick up and will come as a further boost to George Osborne, the Chancellor," it says.
However, the BBC sounds a note of caution, pointing out that current growth is "still well below the rate experienced during previous recoveries from recessions since 1945".
And the British economy remains 3.2 per cent smaller than it was at its pre-recession peak in the first quarter of 2008.
The news could have repurcussions for the Bank of England, which earlier this month announced that interest rates would remain at their historic low of 0.5 per cent for three years, or until unemployment fell below seven per cent.
"Signs of a stronger-than-expected recovery are also likely to frustrate the Bank of England's plans to persuade the markets that interest rates will remain on hold until 2016," says the Guardian. ·