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UK economy gathers speed, outpaces eurozone
LONDON, Aug 10, 2018 (BSS/AFP) – Britain’s economy picked up speed to outpace
the eurozone in the second quarter despite mounting concerns over Brexit,
official data showed Friday, 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 percent 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 percent 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-percent
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.
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“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 percent 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.
BSS/AFP/SR/1810 HRS