Britain strides out with1.1 percent quarterly growth

23rd July 2010, Comments 0 comments

Britain's economy grew robustly by 1.1 percent in the second quarter, the strongest pace since 2006 as the recovery took hold, official data showed on Friday far outstriding forecasts.

The data, published by the Office for National Statistics (ONS), beat forecasts for 0.6-percent growth in the April-June period, and builds on the economy's modest emergence from recession late last year.

"Gross domestic product (GDP) increased 1.1 percent in the second quarter of 2010. The increase in output was due mainly to increases in business services and finance and construction," the ONS said in a statement.

Economists were left stunned by news of the huge rate of quarterly expansion, but warned about the impact of the British government's austerity measures that are aimed at tackling a huge public deficit.

"This is an absolutely incredible growth number -- way above all expectations and the best performance since the first quarter of 2006," said IHS Global Insight economist Howard Archer.

The economic recovery picked up speed after 0.3-percent expansion in the first three months of the year.

On an annual basis, GDP expanded 1.6 percent in the second quarter, compared with the equivalent period in 2009.

"UK second-quarter GDP is startlingly strong," said ING economist James Knightley.

"The government will likely argue that this vindicates their decision to push ahead with aggressive fiscal austerity measures in order to combat the UK's deficit and debt problems," said Knightley.

"However, we are cautious that confidence has weakened and business surveys suggest softer growth in the third quarter. Moreover, the wave of fiscal austerity hitting the UK will also constrain economic activity."

© 2010 AFP

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