UK economic growth jumps to 1.1%
27th July 2010
Source: BBC
The UK economy grew by a faster-than-expected 1.1% in the second quarter of the year, according to official data.
The
figure - a preliminary estimate from the Office for National Statistics
(ONS) - was almost double the 0.6% growth rate expected by economists.
It
was the fastest quarterly expansion since 2006, and marked a sharp
pick-up in pace from the 0.3% growth of the first three months of the
year.
Much of the growth came from the key services sector.
Within
the services sector, which accounts for about three-quarters of the UK
economy, business and finance posted its strongest rise in almost three
years, rising by 1.3% over the quarter.
There was a big
contribution from the construction industry, which grew at its fastest
pace since 1963, in part because bad weather at the start of the year
meant builders were catching up on work that should have taken place
then.
The only sector to register a fall was transport and
communications - down 0.7% on the quarter following the impact of
Iceland's volcanic ash cloud in April.
The ONS said the last time the UK had growth of more 1.1% in any quarter was in 1999.
'Strong rise'
The Chancellor, George Osborne, said the figures proved his plan to cut the public sector was right.
He
said: "In the Budget, I set out a plan to restore confidence in our
economy by dealing with the deficit, starting this year, and to
rebalance growth from the public to private sector.
"Today's
figures show the private sector contributing all but 0.1% of the growth
in the second quarter, and put beyond doubt that it was right to begin
acting on the deficit now."
His predecessor, Alistair Darling,
said the figures owed more to his government's policy. He said they
vindicated the "measured and balanced" approach taken by the Labour
government.
The BBC's economics editor, Stephanie Flanders, said
it was always important not to read too much into one set of figures -
however striking.
And economists said the rise did not mean the UK economy had fully recovered.
George
Buckley, economist at Deutsche Bank, said: "This is a very strong rise.
It is good news to the extent that the recovery seems to be gaining
traction, the bad news is that it is going to take a long time before we
get back to the peak levels we saw at the start of 2008."
And the phrase "as good as it gets" summed up the view of a number of observers, including the Institute of Directors (IoD).
Graeme
Leach, the IoD's chief economist, said: "The latest quarterly GDP
figures were good news, but we think they're likely to be as good as it
gets. We do not think this rate of growth can be maintained.
