UK economy gathers speed, outpaces eurozone
10 Aug 2018 06:17PM (Updated: 10 Aug 2018 06:20PM )
LONDON: Britain's economy picked up speed to outpace the eurozone in the second quarter despite mounting concerns over Brexit, official data showed Friday (Aug 10), helped partly by sunny weather and the World Cup football tournament.
Gross Domestic Product - the value of all goods and services produced in an economy - grew 0.4 per cent in the three months to the end of June, the Office for National Statistics (ONS) said in a statement. That was in line with market expectations.
Britain, which is scheduled to leave the European Union next March, saw its economic activity outpace the eurozone which grew 0.3 per cent in the same period.
Retail sales and construction in Britain were boosted by warm weather.
The economy meanwhile appeared to shrug off a string of company collapses on the high street, including budget chain Poundworld and electrical retailer Maplin.
World Cup revellers sent the cash tills ringing as manager Gareth Southgate's England team progressed to the semi-finals at the tournament held in Russia.
"The pick-up in quarter two reflects, to some extent, consumers taking advantage of the warm weather and World Cup celebrations," the ONS said on Friday .
However, it also sounded a cautious note amid ongoing Brexit uncertainty - and stuttering trade talks between London and Brussels.
"Abstracting from these quarterly movements, the underlying trend in real GDP is one of slowing growth," the ONS warned.
The UK growth rate nevertheless marked an acceleration from 0.2-per cent expansion in the first quarter, when GDP slid on frosty weather and heavy snowfall from the so-called Beast from the East.
"The economy picked up a little in the second quarter with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year," said Rob Kent-Smith, ONS head of national accounts.
"However, manufacturing continued to fall back from its high point at the end of last year and underlying growth remained modest by historical standards."
BOE "RIGHT TO RAISE RATES"
Friday's news came one week after the Bank of England raised British interest rates by a quarter-point to 0.75 per cent to help tame high inflation - and upgraded its 2019 economic growth forecast despite investor fears of a chaotic no-deal Brexit.
The BoE also maintained its 2018 economic outlook, describing a first quarter slowdown as "temporary" with momentum set to recover in the second quarter despite widespread trade-linked worries over the global economy.
"The GDP figures confirmed that the economy bounced back after the weak start to the year and will reassure the (BoE) that it was right to raise interest rates last week," said Ruth Gregory, senior UK economist at research consultancy Capital Economics.
"Of course, Brexit-related uncertainties could intensify over the coming months, if the EU negotiations stall or if Brexit turmoil results in a general election.
"In the absence those developments, however, we remain cautiously optimistic about the economy's ability to expand at reasonably solid rates over the remainder of the year."
Britain is scheduled to leave the European Union in March 2019, following the shock Brexit referendum that was held two years ago.
Source: AFP/aa