Gross domestic product grew 0.7 percent on the quarter in the April-June period, in line with economists’ forecasts, after a first-quarter expansion of 0.4 percent, according to the Office for National Statistics in a preliminary estimate.
Growth was largely led by the gas and oil industry, whose output jumped to 7%. The ONS say that may be due to tax cuts for the oil industry announced in March’s budget.
These statistics are clear signs that economic recovery is well under-way; the economy is now about level with the peak reached in the first quarter of 2008, before the financial crisis.
Due to the rate of recovery, some economists expect a minority of policymakers to vote to raise interest rates as soon as next week’s BoE meeting; however, it is more likely to be early 2016.
Manufacturing output figures were weaker, falling 0.3% as a combination of the strong pound and weak export markets hurt activity.
Based on thse statistics, the UK may be on track to become the fastest growing G7 economy. Howard Archer of IHS Global Insight explains:
“Growth of 2.6% in 2015 would likely make the UK, the fastest growing G7 economy as it was in 2014.
IHS currently forecasts GDP growth in 2015 of 2.2% in the US, 1.7% in Germany, 1.2% in France and 1.0% in Japan. We see overall Eurozone growth at 1.5% in 2015″
Data for other countries are set to be released later this week: the US on Thursday, Canada on Friday, eurozone data on August 14, and Japan on the 17th.