Q2 GDP up 0.6pc
The largest contribution to growth came from services; these industries increased by 0.6% contributing 0.48 percentage points to the overall 0.6% increase in GDP.
Vicky Redwood, chief UK economist for Capital Economics, said: “The provisional estimate of quarter two GDP confirms that the recovery has gathered momentum in the last three months. The 0.6% quarterly rise was double quarter one’s 0.3% increase and in line with both expectations and the picture already painted by the monthly data and the business surveys.”
Output in the construction industry was estimated to have increased by 0.9% following its lowest level of growth in the previous quarter, since quarter one 2001.
Before the sharp fall in output in 2008 and 2009 the economy peaked in quarter one 2008. From peak to trough the economy shrank by 7.2%.
Redwood said: “Even a 0.6% quarterly rise is fairly mediocre after such a deep recession and GDP is still 3.3% below its peak. And with households’ real pay still falling, bank lending flat and public sector austerity measures building, the economy may struggle to maintain its recent rate of growth in the second half of this year.”
But she added there was building evidence that the economy was gradually getting back on its feet.
He said: “The firmer signs of recovery make it all the more important that the Monetary Policy Committee reassures the markets that interest rates will stay low even as the recovery gathers further momentum. So the committee is still likely to implement “forward guidance” at its next meeting.”