The UK economy grew faster than expected in the second quarter of 2007, indicating that further interest rate rises may be needed to curb inflation, according to the Office for National Statistics.
The figures released today show that GDP grew by 0.8% in the three months to June, ahead of analysts’ predictions of 0.7%. Annual growth came in at 3%, slightly higher than predictions of 2.9%.
Gavin Redknap, analyst at Standard Chartered says: "The result means that for the sixth straight quarter the UK economy has been growing at or above trend - raising further questions as to the extent of spare capacity in the economy.”
The hotel and restaurant sector grew by 0.4% compared with 1% in the first quarter of 2007, which may be due to poor weather throughout June.
Business support services grew by 1.3%, an increase on the 1% growth rate seen in the previous quarter, largely due to increased demand for computing services, legal services, recruitment, architects and engineers.
Government and other services grew by 0.1%, compared with 0.5% in the first quarter, due to slow growth in recreational facilities.
The figures mean that a further interest rate rise in 2007 is increasingly likely and some analysts believe the MPC could make another rate hike in August.
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Two global vehicles
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