You are here: Home - Saving & Banking - News -

GDP sees 0.4% growth but still ‘playing catch-up’

0
Written by: Paloma Kubiak
10/08/2018
UK Gross Domestic Product (GDP) was estimated to have grown 0.4% in the second quarter of 2018, rebounding from the 0.2% reported in the first three months of the year.

The latest figures from the Office for National Statistics, revealed that the services industries grew 0.5%, the strongest reading since the end of 2016, while construction increased 0.9%, though this is still behind last year’s reading.  

But the positive trend was offset by a 0.8% reduction in production, the weakest quarterly growth since Q4 2012. This was driven by a 0.9% fall in manufacturing and a 2.7% fall in energy supply, while mining and quarrying, and waste management production both rose by 0.7% and 1.9% respectively.

While the figures – in line with expectations – show a rebound from the 0.2% reported in the first quarter of the year, the UK hasn’t recovered lost ground.

Anthony Gillham, Quilter Investors head of investment, said: “There is an important distinction to be made here – the economy is growing faster than it did in the first quarter, but it is still playing catch-up.

“While growth has improved slightly, it does so from a low starting point. Over the medium term, UK growth has been thoroughly unspectacular, with the domestic economy expanding at a slower pace than most developed countries.

“There is a real risk of stagflation on the horizon. The UK finds itself in a difficult situation where the Bank of England is hiking rates to try and keep a lid on import costs that drive up inflation, but it is doing so against the backdrop of weak economic growth.”

Laith Khalaf, senior analyst at Hargreaves Lansdown, said in today’s economic climate, 0.4% quarterly growth “draws a small cheer from the crowd”, but in the ten years running up to the crisis, UK economic growth averaged 0.73% per quarter.

“Indeed a rather less than encouraging assessment of the UK’s economic prospects can be found in the performance of the pound, which has slipped back below $1.30 against the dollar in the last week, despite a rise in UK interest rates. Fears over the potentially negative impact of Brexit clearly play a part in this.

“This suggests the shackles are still on the UK economy, and that spells more or the same in terms of interest rate policy for the foreseeable future. There are also only a limited number of big sporting events, heatwaves and royal marriages which can bail the economy out.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

  • 4 in 10 grandparents (5.8 million) give their children and grandchildren a helping hand, gifting an average of £1,4… https://t.co/oSyvS8KjIy
  • RT @YourMoneyUK: Beneficiaries of #pension transfers made while the holder was in poor #health could be hit with shock 40% inheritance #tax
  • RT @YourMoneyUK: Beneficiaries of #pension transfers made while the holder was in poor #health could be hit with shock 40% inheritance #tax
Read previous post:
The severe limitations of the free EHIC

Many people travelling to Europe will be relying on a European Health Insurance Card (EHIC), foregoing the purchase of travel...

Close