LONDON: Exports and business investment helped the UK economy expand in the second quarter, according to official figures that confirmed a pickup in growth after a sluggish start to the year.
The Office for National Statistics said GDP rose 0.7% in the three months to the end of June, unchanged from an estimate made a month ago but a marked acceleration on 0.4% in the first quarter. Further details from the ONS on Friday showed that net trade made its biggest contribution to growth for four years.
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The news was welcomed by the Treasury, which has pledged to rebalance the economy towards more exports and less reliance on domestic, consumer spending.
But economists warn the pickup in exports could prove short-lived given businesses have been complaining that a strong pound is hurting overseas sales. At the same time, recent turmoil in global markets sparked by China’s stocks rout may dent export demand over coming months.
The ONS data also confirmed the manufacturing sector shrank by 0.3% in the second quarter. The manufacturers’ organisation, EEF, said that raised questions about whether the strong growth in business investment could be sustained, after it notched up the fastest expansion for a year in the second quarter at 2.9%.
While today’s second estimate of GDP data shows the UK economy has not rebalanced yet – with private consumption remaining the largest driver of growth in Q2 – there were some positive signs of strength in business investment,” said Zach Witton, EEF’s deputy chief economist.
