UK growth ‘is unlikely to gather speed’ after poor Q2

Britain’s economy looks unlikely to gather speed from the meagre growth rate recorded in the second quarter as cash-strapped consumers tighten their purse strings and the global outlook turns gloomier.

With the UK government’s hands tied by tough austerity measures, the onus to boost growth lies with the Bank of England, though a fresh round of monetary stimulus still looks unlikely for the time being, economists said yesterday.

It came after official figures showed that GDP grew by just 0.2 per cent in the second quarter, taking annual growth to 0.7 per cent, confirming preliminary estimates.

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Markit economist Chris Williamson, who is forecasting expansion of 0.2 per cent in Q3, said: “The main concern is whether the soft patch will turn into something more protracted. The business and consumer surveys indicate that growth most likely remained lacklustre in July and August.”

The Office for National Statistics has already said that a number of seasonal factors, such as the royal wedding and unusually hot spring, clouded the Q2 picture and real quarter-on-quarter growth could be up to 0.5 percentage points higher as a result.

Some analysts expect part of this to be recovered in the third quarter but a slowdown in key UK export markets has darkened the outlook for the economy.

Samuel Tombs, UK economist at Capital Economics, said: “With the forward looking indicators for the third quarter remaining downbeat and recent stock market turmoil clouding the outlook, we strongly doubt that any small pick-up in GDP growth in third quarter will reignite the recovery.”