Upbeat forecasts adds to optimism over economic recovery
Sunday 21 July 2013
The UK recovery will pick up pace this week as official estimates reveal the strongest advance for the economy since last summer's London Olympic Games.
Economists expect growth of 0.6 per cent between April and June, the best since the 0.7 per cent seen between July and September last year and improving on the 0.3 per cent expansion in the first quarter. It would also mark the first time the nation has experienced two successive quarters of rising GDP since 2011.
But the growth is likely to have been fuelled almost entirely by the UK's dominant services sector, which accounts for more than three-quarters of output. Experts say the smaller construction sector will have a marginal impact while industrial production – which includes manufacturing – may contribute just 0.1 percentage points after stagnating in May.
The Bank of England has revised up its own forecast of second-quarter growth to 0.6 per cent, while financial data provider Markit's closely watched purchasing manager surveys signal the same pace of growth.
BNP Paribas economist David Tinsley said: "Our own forecast is for 0.7 per cent growth, although the risks are to the downside. Pretty much all the growth is going to have to come from services."
But despite the acceleration, even a growth of 0.6 per cent will leave the economy more than 3 per cent below its pre-recession peak five years ago.
Markit chief economist Chris Williamson warned that the buoyant performance may be a high-water mark for the year after the International Monetary Fund cut global growth forecasts two weeks ago.
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