Business World

Wednesday 22 February 2017

Sharp rise in construction activity boosts UK growth

Published 28/08/2010 | 05:00

Britain's economy grew by 1.2pc during the second quarter of the year, faster than the earlier estimate of 1.1pc, thanks to a sharp rise in construction, a government agency said yesterday.

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The report, however, failed to allay fears that growth will slow down as the government imposes stringent spending cuts later in the year.

The update from the Office for National Statistics confirmed that the British economy grew for a third straight quarter, following six quarters of negative growth during a deep recession.

Output in the construction industry grew by 8.5pc during the quarter, higher than the 6.6pc reported in the first estimate on July 23.

Output growth from the services industries was revised downward from 0.9pc to 0.7pc, and other categories were unchanged, the agency said. Despite the robust headline figure, economist Samuel Tombs at Capital Economics said that the figures "cast doubt on the sustainability of the recovery".

Fragile

"The expenditure breakdown of GDP shows that the recovery is built on very fragile foundations. Household and government spending did post solid rises of 0.7pc quarter-to-quarter and 0.3pc quarter-to-quarter respectively, but both sectors are very unlikely to maintain such growth rates as the fiscal squeeze kicks in over the coming quarters.

"Meanwhile, total investment posted a larger than expected fall, while net trade made no contribution to GDP growth," Mr Tombs said.

Meanwhile, a closely watched survey shows German consumers are upbeat about their economy, indicating it is sustaining its upward trend despite worries about the global recovery.

Germany's GfK institute said on Thursday that its forward-looking overall indicator for September edged up to 4.1 points from the 4.0 points it registered in August.

The survey is the latest indicator that Europe's biggest economy is experiencing a sustained recovery, with consumer confidence reflecting the nation's strong economic development and robust labour market.

Irish Independent

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