U.K. Economy Grows More Than Expected
{{#rendered}} {{/rendered}}LONDON — The U.K. economy expanded an upwardly revised 1.2 percent in the second quarter, as the services and construction sectors gathered traction and consumption grew, supporting the view that the country's economic recovery is gaining momentum.
Data from the Office for National Statistics released Friday showed that a 0.7 percent quarter-on-quarter expansion in services-sector activity and an 8.5 percent increase in construction — the strongest since 1982 — boosted output. Household spending increased 0.7 percent, after a 0.1 percent decline the previous quarter.
From the same period a year earlier, the economy grew 1.7 percent in the April-June period, faster than the ONS's previous estimate of a 1.6 percent expansion.
{{#rendered}} {{/rendered}}Economists polled by Dow Jones Newswires last week had tipped the data to be unrevised. Investor reaction was muted; the pound slipped slightly, as the dollar broadly strengthened, while September gilts rose 0.20 to 126.20.
While the strength of the second-quarter figures is a positive sign, the U.K. economy faces huge challenges ahead. The June budget detailed a combined £113 billion ($175.55 billion) of spending cuts and tax increases by 2015, which will weigh heavy on private demand.
Signs of that were evident in Friday's figures, which indicated the slowing contribution of the public sector to growth, with government spending increasing only 0.3 percent on the quarter compared with a 1.5 percent gain in the first quarter.
{{#rendered}} {{/rendered}}Click here to read more on this story from the Wall Street Journal