27
Aug
UK economy grew 'more than first thought'
The UK economy grew by more than initially thought in the second
quarter of 2010, boosted by a strong performance by the
construction sector.
The economy grew by 1.2% in the quarter, the Office for National
Statistics (ONS) said, revising up its initial estimate of 1.1%
growth.
That was the fastest rate of quarterly expansion recorded since
the first three months of 2001.
But one area that suffered a big fall was air transport, which
fell 11%.
The first estimate of gross domestic product (GDP) is usually
revised twice at monthly intervals.
'Positive' effect
The ONS said construction output grew by 8.5% in the second
quarter, up from a previous estimate of 6.6%.
Aileen Simkins from the ONS said the overall effect in the
quarter had been "very positive".
She said the fall in air transport reflected the effect in April
of the ash cloud as well as the British Airways strike.
A spokesman for the Treasury said: "While the government is
cautiously optimistic about the path for the economy, the job is
not yet done.
"The priority remains to implement the Budget policies which
support economic rebalancing and help ensure the sustained growth
that the Office for Budget Responsibility forecast this year and
next."
'Eyes on the road'
Growth in the key services sector, which accounts for about
three-quarters of the UK economy, was revised down to 0.7%.
Within the sector, business services and finance posted a rise of
1.5%, revised up from 1.3%.
But business leaders warned that the strong pace of growth would
not last.
"Today's figures are obviously good news, but we shouldn't get
carried away," said Graeme Leach, chief economist at the Institute
of Directors.
"Instead of looking in the rear view mirror at what has passed,
it would be wiser for us to keep our eyes on the road ahead. We
don't expect this level of growth to be sustained through the
second half of 2010.
"But whether or not this slide will turn into a quarterly
decline or a double-dip recession remains highly uncertain."
Meanwhile, David Frost, director general of the British Chambers
of Commerce, said that economic growth in the US was of equal
concern.
"Clearly the US is a major driver for the global economy. We
know that China is performing well, but the US has a fundamental
role in driving the economy and any weakness in that will ripple
through," he told the BBC.
"So we've got to ensure equally that growth in the US will get
back on track."
The second estimate of US economic growth is expected later.
Most economists anticipate a sharp downward revision from the
annualised rate of 2.4%, first estimated at the end of July.
'Vindication'
The second-quarter performance in the UK marked a sharp pick-up
from the 0.3% growth seen in the first three months of the
year.
Shadow education secretary Ed Balls said that the previous
Labour government could take credit for the most recent
expansion.
"Those figures are for the period for April, May and June, which
are absolutely determined by what was being done in the previous
year," he said.
"The question is whether that pattern, which you see confirmed
today, which I think is a vindication of what we were doing in
government, whether that pattern continues or whether it goes into
reverse."
Source: http://www.bbc.co.uk/news/business