UK GDP rose 0.9 percent in the second quarter, up from the expected value of 0.8 percent according to the report published by the Office for National Statistics. This increase suggests that the country is recovering faster than expected.
The increase in GDP by 0.9% in second quarter this year is 2.7 percentage points above the level seen in Q1 2008, immediately prior to the economic downturn. Q2 2014 rose by 3.2 percent when compared with the same quarter a year ago, the report said.
Largest increase in output was seen in services (1.1 percent), followed by construction (0.7 percent) and total production increased by 0.2 percent. However, agriculture, forestry and fishing fell by 0.3 percent.
The economic recovery is spread across all sectors, especially by household consumption and the housing market. But on the other hand, nation’s current account deficit was £23.1bn in the second quarter, rising sharply from £20.5bn in the first quarter.
Scott Corfe, head of macroeconomics at the Centre for Economics and Business Research (CEBR) said, "Politicians will seize on the latest data to argue that the UK economy is more healthy than previously thought, but there are some major causes for concern in the latest release – principally around the UK's trade position with the rest of the world".
He added, “We have been arguing for some time that the current account deficit – a measure of the UK's trade position – could start to significantly hold back economic growth prospects and lead to a sterling depreciation in the future. The latest data suggest that these concerns are justified, with the deficit failing to narrow."
"While a smaller than previously reported recession in 2008/9 and better than previously reported GDP growth since then is welcome news, it does not hugely change the growth outlook - especially as there have been no major revisions to the economy's performance in 2013 and the first half of 2014”, Howard Archer, chief UK and European economist at IHS Global Insight, said.
He continued, "What it does imply though is that the UK's recent productivity performance has not been as bad as thought and that the economy has greater capacity to grow without generating inflationary pressures."
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