UK’s GDP rise of 0.7% puts growth back on track

Tax breaks for the North Sea oil and gas sector helped it register a strong second-quarter performance. Picture: PA
Tax breaks for the North Sea oil and gas sector helped it register a strong second-quarter performance. Picture: PA
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UK growth bounced back in the second quarter of 2015 as gross domestic product (GDP) increased by 0.7 per cent, according to official figures.

It means GDP per head - a measure which takes into account that the nation’s wealth is shared by an expanding population - has now caught up with pre-crisis levels at the start of 2008.

The overall GDP figure, published by the Office for National Statistics (ONS), was in line with expectations.

Confirmation that growth is now back on track could add to speculation about the timing of an interest rate being brought forward.

A return to form for the dominant services sector, which has led the economy out of recession, helped the UK improve on a disappointing start to the year when GDP increased by just 0.4 per cent.

Tax breaks for the beleaguered North Sea oil and gas industry meanwhile helped the production sector to its strongest performance for four and a half years.

The mining and quarrying sub-sector within which oil and gas output is classified saw its best quarter for nearly 26 years.

But Britain’s factories - which have been hit by the strength of the pound weighing on exports - struggled. Manufacturing shrank by 0.3 per cent, the worst performance since the start of 2013.

The construction industry was also flat, continuing its sluggish run since the end of last year.

ONS chief economist Joe Grice said: “After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years.

“But the pattern has differed across the economy. Overall growth has been driven by the service sector and the strongest growth in mining and quarrying since 1989.

“However, manufacturing output has fallen slightly and construction has been flat.

“The growth announced today takes GDP per head back to broadly level with its pre-economic downturn peak in Q1 2008.”