UK economy grew faster than first thought in Q2 2010

Britain's economy expanded at a faster pace than first thought with growth of 1.2 per cent in the second quarter of the year - a rate not seen for nine years, official figures revealed today.

The advance - the strongest since the same figure was achieved in the first quarter of 2001 - was attributed to record-breaking gains in the construction sector, which helped lift the country's industrial production.

Today's figures showed a slight downward revision to growth from the key services sector, which accounts for more than 70 per cent of GDP, from 0.9 per cent to 0.7 per cent, compared with a 0.3 per cent rise in the first quarter. But a record-breaking performance in construction sector output, revised upwards from 6.6 per cent to 8.5 per cent, its strongest rate since the first quarter of 1982, led to the upward revision of the GDP growth rate.

The estimated growth rate for the quarter at 1.1 per cent was already the strongest in four years when it was released last month, so a further increase will add to hopes for a solid economic recovery.

However economists have warned growth in the second quarter represents a peak in the rate of recovery and any further gains of such magnitude are unlikely.

There was no upward revision to the manufacturing sector growth in the quarter, which remains at 1.6 per cent, compared with a 1.4 per cent rise in the previous quarter. A fall of 2.2 per cent in the transport and storage industries was attributed to a poor performance from air transport, as a result of disruption caused by the volcanic ash cloud.

Today's figures revealed household spending rose 0.7 per cent in the second quarter - compared with a fall of 0.1 per cent in the first quarter. The rise in spending - the largest since the first quarter of 2008, when it was 0.8 per cent - was attributed to a pre-World Cup spending spree, with notable rises in food and drink, households goods and recreational purchases including televisions.

Government spending was also a main driver, up 0.3 per cent on the quarter. 

A Treasury spokesman said: "While the Government is cautiously optimistic about the path for the economy, the job is not yet done. The priority remains to implement the Budget policies which support economic rebalancing and help ensure the sustained growth that the Office for Budget Responsibility forecast this year and next."

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