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LONDON — The UK’s Office for National Statistics said on Friday that the UK economy outperformed expectations with 0.2% growth in the second quarter, boosted by household consumption and manufacturing output.
Economists polled by Reuters said Britain’s gross domestic product (GDP) posted an unexpected 0.1% growth in the first quarter as Bank of England tightening and continued inflation began to dampen demand. After that, we expected the second quarter to be flat.
The economy grew 0.5% in June, beating expectations of 0.2%. This follows monthly GDP growth of 0.1% in May and 0.2% in April. However, June’s surge was due in part to warmer weather and the addition of a holiday in May to celebrate the coronation of Charles III.
Output in the second quarter increased 1.6% in manufacturing, 0.7% in output and 0.1% in services.
In terms of spending, the ONS noted significant growth in household and government consumption. Both companies faced price pressure in the quarter, but it eased compared to the previous three months.
“The numbers are still pretty weak.
Cope said the numbers continued a recent pattern of unexpected growth. The Bank of England downgraded its UK recession forecast in May. In the latest Monetary Policy Report, Said Quarterly GDP growth is expected to remain around 0.2% in the short term.
Cope added that the effects of tightening monetary policy in the UK will take time to seep in.
“The Bank of England now predicts a recession can be avoided and will grow faster than Germany, France and Italy in the long run if it sticks to its plans to help people get jobs and boost business investment. The IMF says it will not,” UK Finance Minister Jeremy Hunt said in a statement on Friday.
The central bank raised its policy rate by a quarter percentage point to 5.25% in August, and policymakers will monitor the latest GDP data ahead of the central bank’s September meeting. Inflation in the UK, at 7.9%, is the highest among all advanced economies, and the Bank of England now expects it to fall short of its 2% target by 2025.
Ruth Gregory, deputy chief UK economist at Capital Economics, said in a note on Friday that consultancies still expect the UK to slip into a mild recession later this year as the impact of rising interest rates is felt. Ta.
“That may not prevent the central bank from raising interest rates to 5.50% in September from the current 5.25%,” he said. “It could mean that it won’t go up to .00%.”