A sharp rise in household expenditure helped overall UK GDP rise by 0.3% in the second quarter, maki...
A sharp rise in household expenditure helped overall UK GDP rise by 0.3% in the second quarter, making it the second quarter in a row that the growth rate improved and cementing the country's position as the best-performing major European economy.
Households increased their spending by 1.3% in the quarter, a big rise on the 0.2% increase reported for the first quarter.
However, figures from the Office for National Statistics also show that manufacturing continued to face difficulties as export markets remained sluggish, resulting in a marginal 0.1% rise in manufacturing output.
Investment in capital continued to fall.
The 0.3% GDP growth rate, while an improvement on the rate of 0.1% recorded for the first quarter, increases doubts that chancellor Gordon Brown's target of 2% to 2.5% growth over the full year will be met.
This in turn could mean the base interest rate stays pegged at 3.5% for longer than previously thought, with the first increase now pushed out firmly to the first or second quarters of next year among some economists.
Also questionable is what role increased public spending has had in propping up consumer confidence.
The Institute for Fiscal Studies this week reported that it is increasingly concerned by the growing gap between government tax receipts and rising levels of expenditure. It said Gordon Brown may have to rethink spending commitments or raise taxes if he was not to break his own rules on government spending over the economic cycle.
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