UK’s Q2 growth steady at 0.7%

<p>Initial figure was released in June and the ONS has left it unrevised.</p>

The UK's economic growth for the second quarter of the year was 0.7 per cent, according to official data.

An initial figure for the three months to June was released in July and showed results boosted by oil and gas production – up from 0.4 per cent during the first quarter. On Friday (August 28th), the ONS said it would not be making any changes to the original reading.

The data showed that net trade boosted GDP by one per cent during the period, following a 3.9 per cent jump in exports. This was the biggest contribution from trade in four years, but experts have warned that the increase in trade might be temporary due to the strength of the pound making British goods more expensive overseas. In addition, ongoing trouble in the Chinese markets has led to increased global uncertainty.

During a television interview with Bloomberg, Liz Martins, an economist for HSBC, said: "For all the talk of weakness in our key trading partners and strength in the currency, this is a very strong number from exports."  

She added: "There's been some turmoil and from the market perspective, expectations have been pushed back a bit, but I think it's possible that some of those expectations have been overdone and we still look to February for the Bank of England to start raising interest rates."

Current pace expected to continue

Imports gained just 0.6 per cent during the second quarter, while business investment rose 2.9 per cent. Economist Samuel Tombs from research consultancy Capital Economics, said this demonstrated how much the general election weighed on capital expenditure.

Household spending increased by 0.7 per cent during the second quarter, although the growth rate has slowed compared to the 0.9 per cent seen during the first three months of 2015.

According to the Bank of England, economic growth is expected to continue. Last year, the economy expanded by three per cent – its best result since 2006. This year, growth is forecast and 2.8 per cent.

Mr Tombs said: "With growth in households' real incomes set to remain supported by low inflation, building wage growth and strong job creation, we continue to think that the economic recovery will sustain its current pace in the second half of 2015."

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