Britain’s economy rebounded in the second quarter despite Brexit uncertainty according to Office for National Statistics figures published today.
GDP expanded by 0.4 per cent in April to June, but on an annual basis the growth rate picked up 1.3 per cent in the second quarter.
This was only a touch above a nearly six-year low of 1.2 per cent at the start of the year.
On a sector-by-sector basis, services which make up the major part of the UK economy and includes the retail industry grew by 0.5 per cent, its strongest reading since the end of 2016.
Construction also made a positive contribution to economic growth posting a rise of 0.9 per cent, but remains behind the trend of last year.
The manufacturing sector posted a second quarter of decline, falling back by 0.9 per cent, and exerting downward pressure on the headline figure.
Hargreaves Lansdown senior analyst Laith Khalaf says: “The UK economy has gathered momentum in the second half as the World Cup, the Royal Wedding and warm weather got consumers spending their pennies on beers and barbecues.
“Not everyone makes hay when the sun is shining though, with energy suppliers seeing a 2.7 per cent decline in production as the warm weather meant reduced demand for household heating. In today’s economic climate 0.4 per cent quarterly growth draws a small cheer from the crowd, though it would have been deemed below par prior to the financial crisis.
“In the 10 years running up to the crisis, UK economic growth averaged 0.73 per cent per quarter.”
Khalaf points to the performance of the pound providing a less than encouraging assessment of the UK’s economic prospects as it slipped back below $1.30 against the dollar over the past week, despite the increase in Base rate.
He points out that while Brexit fears are likely to have played a part in this, the strength of the dollar is equally important.
The IMF expects the US economy to grow by twice as much as the UK economy this year, forecasting 2.9 per cent growth over the pond compared with 1.4 per cent here.
Khalaf adds: “The shackles are still on the UK economy, and that spells more or the same in terms of interest rate policy for the foreseeable future.
“There are also only a limited number of big sporting events, heatwaves and royal marriages which can bail the economy out.”
GWM Investment Management head of wealth management Rob Hodgson says: “The main indicators were suggesting a rebound from the weak first quarter and severe weather conditions had played their part in those numbers.
“Today’s data release comes amid a resilient jobs market and wage growth is starting to outstrip inflation.
“The Bank of England may have been slightly nervous about this data release because poor numbers would have put a spotlight on their decision to raise rates last week.
“It is important to remember that one quarter’s reading is of course a fairly brief snapshot. Looking at the bigger picture, UK economic growth is still way below the gains we were used to before the financial crisis.”