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UK economic growth picks up to 0.7% in second quarter UK economic growth picks up to 0.7% in second quarter
(35 minutes later)
UK economic growth accelerated in the second quarter of the year, helped by a big jump in oil and gas production, official figures have shown.UK economic growth accelerated in the second quarter of the year, helped by a big jump in oil and gas production, official figures have shown.
The UK's economy grew by an estimated 0.7% in the April to June period, the Office for National Statistics (ONS) said.The UK's economy grew by an estimated 0.7% in the April to June period, the Office for National Statistics (ONS) said.
That compared with growth of 0.4% in the first quarter of the year.That compared with growth of 0.4% in the first quarter of the year.
Output in the economy during the second quarter was 2.6% higher than the same period a year earlier, the ONS said.Output in the economy during the second quarter was 2.6% higher than the same period a year earlier, the ONS said.
"After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years," said ONS chief economist Joe Grice."After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years," said ONS chief economist Joe Grice.
Oil and gas surge
The economy has now seen 10 quarters of sustained economic growth.The economy has now seen 10 quarters of sustained economic growth.
The ONS stressed the first estimate was based on about 40% of the available economic data and is subject to revision. Oil and gas surge
It said manufacturing output experienced its first fall in two years with output dropping 0.3% in the quarter. The ONS said manufacturing output experienced its first fall in two years with output dropping 0.3% in the quarter.
However, a surge in North Sea oil and gas production lifted overall industrial output by 1% - the biggest increase since late 2010.However, a surge in North Sea oil and gas production lifted overall industrial output by 1% - the biggest increase since late 2010.
The "mining and quarrying" component of the industrial output figures, which includes oil and gas extraction, rose by 7.8% in the quarter, the biggest increase since 1989.The "mining and quarrying" component of the industrial output figures, which includes oil and gas extraction, rose by 7.8% in the quarter, the biggest increase since 1989.
The ONS said the increase, which came despite falling oil prices, was driven by tax cuts in March designed to support the sector.The ONS said the increase, which came despite falling oil prices, was driven by tax cuts in March designed to support the sector.
Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter.Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter.
The UK's dominant services sector recorded growth of 0.7%, following a rise of 0.4% in the previous three months.The UK's dominant services sector recorded growth of 0.7%, following a rise of 0.4% in the previous three months.
Domestic demand is expected to remain strong, as wages rise and with the temporary effects of low inflation boosting consumer spending.Domestic demand is expected to remain strong, as wages rise and with the temporary effects of low inflation boosting consumer spending.
The ONS said there were also signs that businesses were finally increasing investment.The ONS said there were also signs that businesses were finally increasing investment.
The first estimate of GDP is based on about 40% of the economic data used in the final output estimate and is subject to revision. The second estimate is due in about a month's time.
Interest ratesInterest rates
The latest growth figures come amid mounting pressure for a rise in interest rates following five years of rates sitting at the historic low of 0.5%.The latest growth figures come amid mounting pressure for a rise in interest rates following five years of rates sitting at the historic low of 0.5%.
They also come a fortnight after Bank of England governor Mark Carney suggested households should prepare for a rate rise towards the beginning of next year.They also come a fortnight after Bank of England governor Mark Carney suggested households should prepare for a rate rise towards the beginning of next year.
Andrew Sentance, senior economic adviser at PricewaterhouseCoopers and a former member of the Bank of England's interest rate-setting Monetary Policy Committee (MPC), pointed out that in five of the past six quarters, the UK economy had grown by 0.7% or more, suggesting the economic recovery was "well-established".Andrew Sentance, senior economic adviser at PricewaterhouseCoopers and a former member of the Bank of England's interest rate-setting Monetary Policy Committee (MPC), pointed out that in five of the past six quarters, the UK economy had grown by 0.7% or more, suggesting the economic recovery was "well-established".
Mr Sentence, who said recently that he would have voted to raise interest rates, were he still a member of the MPC, added that the UK was on course to grow by 2.6% in 2015 .Mr Sentence, who said recently that he would have voted to raise interest rates, were he still a member of the MPC, added that the UK was on course to grow by 2.6% in 2015 .
"Against this background, higher interest rates should be firmly on the MPC agenda in the second half of this year," he said."Against this background, higher interest rates should be firmly on the MPC agenda in the second half of this year," he said.
Anna Leach, head of economic analysis at the Confederation of British Industry (CBI), forecast that growth would remain "decent" through the rest of the year, helped by lower oil price and inflation, which she said would drive consumer spending and business activity.Anna Leach, head of economic analysis at the Confederation of British Industry (CBI), forecast that growth would remain "decent" through the rest of the year, helped by lower oil price and inflation, which she said would drive consumer spending and business activity.
But she warned: "Performance is mixed across sectors, with UK manufacturers going through a tough time as the stronger pound hits sales into the eurozone. Meanwhile, the eurozone is still grappling with uncertainty over the Greek bailout."But she warned: "Performance is mixed across sectors, with UK manufacturers going through a tough time as the stronger pound hits sales into the eurozone. Meanwhile, the eurozone is still grappling with uncertainty over the Greek bailout."