UK economy registers significant growth

Category: Economy
Date: 7/23/2010

The UK economy grew by 1.1% in the second quarter of the year, significantly more than was expected.

Economists and other experts had predicted a more modest rise of 0.6%, but figures from the Office for National Statistics (ONS) show a better than expected performance in the economy.

Following on growth of 0.3% in the first three months of the year, it marks the most pronounced quarterly rise since 2006, figures show.

Furthermore, the last time growth of more than 1.1% was bettered in any one quarter was more than a decade ago in 1999.

The figures follow yesterday's strong retail sales figures, suggesting the economy could be beginning to make a meaningful recovery, although lasting progress will depend on the success of the coalition Government's cuts.

It is only a preliminary figure from the ONS, so it could be revised once more relevant figures become available.

However, Ian Kernohan, economist at Royal London Asset Management, commented: "Although early estimates of GDP can be unreliable, they tend to get revised up rather than down."

Positive performance in the service sectors helped drive the encouraging figures.

The business and finance sectors – integral to the performance of the UK economy – expanded by 1.3% over the second quarter, while the construction market received a boost with growth of some 6.6%, its strongest quarter performance in decades.

The output of the manufacturing sector also rose, with a 1.6% increase.

In fact, the only sector to shrink in size during the three months from April to June was transport, storage and communication.