Published: Thu, July 27, 2017
Markets | By Erika Turner

United Kingdom economy expanded by 0.3% in second quarter of 2017

United Kingdom economy expanded by 0.3% in second quarter of 2017

Of the three big sectors of the economy, only services were bigger at the end of June than in March, posting growth of 0.5% over the quarter.

That's in line with warnings from the International Monetary Fund after it downgraded expectations for U.K economic growth to 1.7 percent this year from 2 percent.

The UK economy grew by 0.3 per cent in the second quarter of 2017 as construction and manufacturing output fell, clipping the wings of a somewhat resurgent services sector.

Howard Archer, chief economic advisor to the EY Item Club, said: "The second half of 2017 looks likely to remain very hard work for the United Kingdom economy, resulting in ongoing limited growth".

The UK economy expanded 0.3% in the second quarter of 2017 compared to 0.2% in the first quarter.

Weak growth so far may also mean that the Bank of England holds off raising interest rates.

The latest ONS data showed that services continued to dominate GDP growth, recording a 0.5 per cent rise in output for the period.

City analysts and business lobby groups urged caution over the latest United Kingdom official data pointing to quarterly economic growth of 0.3% in the second quarter. Cable was trading at 1.3055 at the time of writing, up 0.24 percent on the day. The largest contributors to growth in services were retail trade, which improved after a fall in the first quarter, and film production and distribution.The construction and manufacturing sectors weighed down on growth as they contracted by 0.9% and 0.5% respectively.

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On the plus side, the United Kingdom economy has now seen 17 consecutive quarters of growth.

"The economy has experienced a notable slowdown in the first half of this year", ONS statistician Darren Morgan said.

That figure also represented a dramatic slowdown from the 0.7 per cent growth in the final quarter of 2016, and the 0.5 per cent growth in the quarter immediately following the referendum.

He said: "Last week saw news that retail sales rose ahead of expectations, indicating the consumer may still have some petrol in the tank - though the Bank of England has expressed caution over rising levels of personal debt".

Regarding GDP per capita, which is an important measure of standard of living, it increased by 0.1% quarter-on- quarter and by 1% year- on- year.

"The underlying trend is for consumer spending growth to moderate as real incomes are squeezed by higher inflation", said John Hawksworth, chief economist at PwC.

Overall, UK economic growth slowed during the first half of 2017 though the ONS claims activity remains 9.0% above its pre-downturn peak.

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