Booming economy puts UK ahead of Euro pack

The Uk economy is expanding at the fastest pace for six years as official figures revealed it is growing more quickly than previously thought.

yesterday the Office for National Statistics said the economy grew 3.2pc between the second quarter of 2013 and the same period this year – a slight increase from the 3.1pc previously calculated.

This is the fastest expansion since the end of 2007 when the figure was 3.7pc.

It also means that the economy is pulling further ahead of the field in europe, including Germany, France and Italy. The official data also confirmed that the Uk has finally emerged from the longest downturn since the war.

last night the Treasury hailed the figures as evidence the government’s ‘long term economic plan is working’. a spokesman said: ‘Today’s figures confirm that our economy has recovered all of the output lost in the great recession and is now bigger than its previous peak in the first quarter of 2008.’

Britain has moved from fourth to third place in the table of fastestgrowing economies in the eU – level with Poland. Only latvia, which has grown 3.5pc, and hungary, up 3.7pc, are expanding quicker.

The main reason for the Uk’s upward revision was that its beleaguered construction industry did not perform as badly as had been thought, posting flat quarter- onquarter growth instead of an initial estimate of a 0.5pc contraction.

The ONS also confirmed yesterday that its initial estimate of 0.8pc expansion between april and June compared with the previous quarter.

Growth during the period was driven by the dominant services sector, which represents three quarters of output and grew 1pc.

David kern chief economist at the British Chambers of Commerce said: ‘These figures provide further evidence that the Uk recovery remains on course.’

It comes after the ONS announced this week that the unemployment rate fell to 6.4pc in the second quarter, the lowest since late 2008 and down from 6.5pc in May. The number of people unemployed fell by 132,000 to 2.08m.

But economists have warned of challenges threatening to stunt the Uk recovery, including news that growth in the eurozone has ground to a standstill.

Figures from eurostat published on Thursday showed the German economy shrank 0.2pc in the second quarter, after growing 0.7pc between January and March.

France, europe’s second-biggest economy, registered no growth for the second quarter running and Italy fell back into recession.

This prompted senior Bank of england official David Miles to describe europe – the Uk’s biggest trading partner as ‘dead in the water’.

kern said: ‘While the strength of the recovery, coupled with the positive job figures should underpin business confidence, further efforts must be made to rebalance the economy towards exports. Recent figures showing stagnant growth in the eurozone will add to the challenges facing our exporters and reinforces the need to diversify our trade into new, dynamic markets outside of europe.’

In its august Inflation Report the Bank of england raised forecasts for growth marginally, and predicted unemployment would fall more sharply than forecast previously. But it also cut the forecast for wage growth this year in half to just 1.25pc, shortly after official data showed wages had suffered their first fall in more than five years in the three months to the end of June.

Some economists believe the Bank has cooled on the idea of an early hike in interest rates, which had been expected later this year.