Exports drive more balanced growth of UK economy
SURGING exports and strong business investment pushed up UK growth in the second quarter, as official data confirmed the economy grew by 0.7pc in the three months to June.
The second quarter expansion follows growth of 0.4pc in the first quarter and was in line with economists’ expectations. Consumer spending rose by 0.7pc compared with the previous quarter, representing the 16th consecutive quarter of growth, while business investment grew by 2.9pc, far stronger than the 1.5pc expected by analysts.
Exports, which dragged down growth in the first quarter, rose by 3.9pc in the period, according to the Office for National Statistics (ONS), while imports grew by 0.6pc.
Detailed data also showed stronger construction output was offset by weaker manufacturing activity. Britain’s services sector expanded by 0.7pc in the three months to June, unchanged from an initial estimate.
Economists described the more balanced composition of growth as “positive and very welcome”.
“There has been a clear improvement in the UK’s export performance since mid-2014,” said Dominic Bryant, UK economist at BNP Paribas.
But many said that the big boost from net trade was unlikely to last.
“The pound’s recent appreciation and the continued weakness of demand in some export markets such as the eurozone and China suggest that net exports are not about to play a sustained role in supporting the economic recovery,” said Samuel Tombs, of Capital Economics. “Nonetheless ... we think the economic recovery will sustain its current pace in the second half of 2015.”
Fears about the health of the Chinese economy hit stock markets this week, with the crisis wiping nearly £115bn off UK shares since the start of August.
Meanwhile, the recent market turmoil has left US policymakers unable to make up their minds on whether to raise interest rates next month for the first time in nine years, according to Federal Reserve vice-president Stanley Fischer.