Britain grows at fastest pace for nine years
Britain's economy grew at its fastest pace for nine years in the second quarter as construction soared, official data showed on Friday, but the nation still faces a tough outlook amid severe budget cuts.
"GDP increased by 1.2 percent in the second quarter of 2010, revised up from 1.1 percent," the Office for National Statistics (ONS) said in a statement. That was the fastest pace since the first quarter of 2001.
Analysts had expected no revision to the initial Gross Domestic Product (GDP) estimate of 1.1 percent published last month, according to a poll conducted by Dow Jones Newswires.
Construction sector output was revised up to 8.5 percent -- the highest rate of growth for 28 years. The ONS had originally put the gain at 6.6 percent.
The Treasury welcomed the data but was cautious regarding the outlook given massive cuts in government spending which are expected to dampen the economy.
"While the government is cautiously optimistic about the path for the economy, the job is not yet done," a Treasury spokesman said.
Britain exited a record recession in the fourth quarter of 2009, a few months before a general election which saw a Conservative-Liberal Democrat coalition defeat the ruling Labour party.
The new government has moved swiftly to cut billions of pounds (dollars) from public spending as it seeks to slash a huge pubic deficit.
"While the second estimate of UK GDP ... confirms that the economy expanded at a pretty robust pace in the second quarter, the figures cast doubt on the sustainability of the recovery," said Capital Economics analyst Samuel Tombs.
"Quarterly GDP growth was nudged up ... largely as a result of faster growth in the construction sector than originally assumed. However, the expenditure breakdown of GDP shows that the recovery is built on very fragile foundations. "Household and government spending did both post solid rises of 0.7 percent and 0.3 percent quarter-on-quarter respectively, but both sectors are very unlikely to maintain such growth rates as the fiscal squeeze kicks in over the coming quarters," Tombs said.
The ONS said the economy grew 1.7 percent in the April-June period compared with the second quarter in 2009. This was also revised higher from an initial estimate of 1.6 percent.
Later Friday, all eyes will be on US data that is expected to reveal a sharp downward revision to second quarter economic growth in the world's biggest economy.
The government could revise downward GDP growth to 1.4 percent from the initial estimate of 2.4 percent, economists say.
© 2010 AFP