UK economy growth overshadowed by US risk

The UK's best growth in nearly a decade was overshadowed tonight by the growing threat of a double-dip recession in the US.

The Office for National Statistics now believes UK gross domestic product jumped 1.2% in the second quarter of this year, higher than it previously thought and the best rise since the first quarter of 2001.



Strong high street sales and a busy period for construction firms after work was delayed by snow and ice at the start of the year helped power the rise.



However any cheer from the UK was soon erased by a downward revision to US GDP growth in the same period, from 2.4% to 1.6% on an annualised basis. The downturn was blamed on the largest surge in imports in 26 years and a slowdown in the restocking of goods by companies.



While the scale of the revision was lower than some analysts feared, it still increased the pressure on US Federal Reserve chairman Ben Bernanke to take action to safeguard the faltering US economic recovery.



In a speech today, Mr Bernanke stopped short of announcing any specific measures but he did raise the prospect of another purchase of securities by the Fed in order to drive down rates on mortgages and other debt.



He described the economic outlook as "inherently uncertain" and said the economy "remains vulnerable to unexpected developments".



Economists warned that US woes revealed a regression in the worldwide recovery and that further gains of the kind seen in UK growth today were unlikely in the future - particularly in the face of fierce austerity measures.



Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "The public sector will soon become a drag on growth as austerity measures begin to bite, and it would be unrealistic to expect the consumer sector to contribute much, given the numerous headwinds buffeting households."



Charles Davis, economist at the Centre for Economics and Business Research (CEBR), said today's UK performance was robust but warned that he expects economic growth in 2011 to be weaker than forecast by either the Bank of England or Office for Budget Responsibility at around 1.6%.



The advance in UK growth was driven by record-breaking gains in the construction sector, which expanded by 8.5%, its best performance since the first quarter of 1982.



There was also a 0.7% increase in consumer spending - compared with a fall of 0.1% in the first quarter - boosted by World Cup sales of food, drink and televisions.



But the ONS figures also revealed a slight downward revision to growth in the services sector, which accounts for more than 70% of GDP, from 0.9% to 0.7%, while investment fell by 2.4% on the quarter.



Samuel Tombs, economist with Capital Economics, said the figures showed that the UK recovery was built on "very fragile foundations".



The US GDP report is the latest in a string of dismal updates, including weak home sales and poor durable goods orders in the last week.



CEBR economist Owen James added: "With a truck load of miserable US economic reports recently, there are growing cries for the Fed to take further action to boost the recovery.



"The consensus mood among the central bankers will be one of genuine concern at the weakening performance of the world's largest economy. Today's data will only add to that."

Sport
world cup 2014A history of the third-place play-offs
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
PROMOTED VIDEO
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
...and the weight loss industry is rubbing its hands in glee
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Sport
Yaya Touré has defended his posturing over his future at Manchester City
News
Detail of the dress made entirely of loom bands
news
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
beauty
Sport
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice