Britain's Economy Picked up Only Slightly in Second Quarter

by Frankie Norman July 27, 2017, 0:49
Britain's Economy Picked up Only Slightly in Second Quarter

United Kingdom economic growth remained tepid in the second quarter, according to the Office for National Statistics, though the initial estimate for gross domestic product was in line with economists' forecasts.

The British economy grew 0.3 percent in the three months to June this year, official figures released on Wednesday stated. After a striking loss of momentum at the start of this year, the International Monetary Fund this week cut its 2017 growth forecast to 1.7% from 2%.

GDP growth was driven by services, which grew 0.5% compared with 0.1% in three months from January to March.

Suren Thiru, head of economics at the British Chambers of Commerce, said: "The pick-up in growth in the second quarter could prove to be a high point for the United Kingdom economy this year".

The UK economy expanded by 0.3 per cent in the second quarter of 2017, in line with consensus forecasts, as a slump in the pound and a spike in inflation continued to weigh on growth.

Andrew Sentance, a former Bank of England rate setter now working with PwC, said the first half growth rate was the weakest in at least five years.

The latest GDP figures show an increase of 0.3 percent during the third quarter of 2017.

Looking at the forex markets, sterling despite showing relative resilience against the greenback in recent weeks, fell slightly from $1.3025 prior the data release to a low of $1.2998.

"Most concerning for living standards is the fact that GDP per capita has shown nearly no growth since the turn of the year, growing by a mere 0.15%, down from 0.8% in the second half of 2016".

Tax breaks for British film production has helped the industry thrive since 2014, while strong takings for blockbusters Pirates Of The Caribbean: Dead Men Tell No Tales and Wonder Woman gave an extra leg up during the second quarter.

Darren Morgan, head of GDP at the ONS, said the economy experienced a notable slowdown in the first half of this year.

"As a result, we think there is scope for a further pick-up in growth in the second half of this year".

She added: "However, at the same time, consumer credit levels are clearly causing a headache for (Bank of England governor) Mark Carney".

On an annualized basis, comparable to United States data, the UK economy grew 1.2% in the second quarter. Meanwhile inflation began to recede, which if it continues in the coming months could end the squeeze on real incomes.

Combine this with the fact that real wages are set to continue to fall this year, it is clear that 2017 will not go down as a good year for the United Kingdom economy.

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