UK economy grew at 1.2% which was more than what analysts expected. This was the highest rate of growth for second quarter since 2001. This spurt in growth was due to building up of stocks by the companies and increase in construction activities.
Gross domestic product rose 1.2 percent from the previous three months, the Office for National Statistics said today in London. That was higher than the 1.1 percent initial estimate, which was the median forecast of 25 economists in a Bloomberg News survey. On the year, the economy expanded 1.7 percent.
Britain’s growth pickup may deepen the divide among policy makers as the Bank of England considers whether the economy faces a greater threat from inflation or needs more stimulus to avert a further recession. The pound declined after the report, which showed slower services growth than previously estimated and a drop in fixed investment.
The U.K. faces the biggest budget squeeze since World War II, which has undermined consumer confidence. At the same time, a debt crisis threatens the recovery in the euro region, the U.K.’s largest trading partner, and there are signs the global recovery is cooling.
The U.S. economy probably grew at a 1.4 percent annualized pace in the second quarter, slower than the 2.4 percent rate projected last month, according to the median forecast of 81 economists surveyed by Bloomberg. That would be the slowest growth since the second quarter of 2009 when the economy was still contracting. That data will be released later today.
The U.K. GDP figure was revised up after construction expanded faster than previously estimated, rising 8.5 percent on the quarter, the most since 1982. Inventories rose by 983 million pounds ($1.5 billion) in the first evidence of stock- building by companies for seven quarters, the statistics office’s report showed.
Consumer spending rose 0.7 percent and government expenditure increased by 0.3 percent, the statistics office said. That offset a 2.4 percent drop in fixed investment.
Growth in services, which account for about three quarters of the economy, was revised down to 0.7 percent from 0.9 percent, the statistics office said. Faster expansion in business services was outweighed by a drop in air transport during a quarter when European airspace was disrupted by an ash cloud caused by volcanic activity in Iceland.
