Skip to content
Search

Latest Stories

Economy posts surprise growth in second quarter

The strong showing bolsters bets that the Bank of England will raise interest rates further

Economy posts surprise growth in second quarter

BRITAIN'S economy eked out unexpected growth in the second quarter, laying the ground for more interest rate hikes from the Bank of England (BoE), but it remained the only big advanced economy yet to regain its pre-Covid level.

Official data on Friday (11) showed the economy grew 0.2 per cent in the second quarter, against the consensus for a flat reading in a Reuters poll of economists. The figures sent the pound sharply higher against the US dollar and euro.

The performance was helped by monthly growth of 0.5 per cent in June.

The strong showing bolstered bets that the BoE would keep on raising interest rates, given the central bank stressed this month that resilience in the economy was one of the factors that would underpin its judgement.

The central bank itself had pencilled in growth of 0.1% for the second quarter.

"It gives the Bank of England a headache - they may well have been thinking about pausing interest rate increases soon, but this data will make that more difficult," said fund manager Neil Birrell from asset managers Premier Miton.

British government bond yields shot higher after the market opened as investors digested the data.

The Office for National Statistics said businesses had cited an additional national holiday in May as a factor for the increased output in June, compared to May.

Manufacturing had its best quarter since early 2019, excluding the initial rebound from the first Covid-19 lockdown in 2020, with output up 1.6 per cent on the quarter.

Business investment also surged, up 3.4 per cent on the quarter.

"The actions we're taking to fight inflation are starting to take effect, which means we're laying the strong foundations needed to grow the economy," chancellor of exchequer Jeremy Hunt said.

While Britain has so far dodged recession, unlike the euro zone, the figures confirmed its relatively poor performance since the onset of the pandemic.

Britain's economy now stands 0.2 per cent below its level in late 2019 as of the second quarter, compared with 0.2 per cent above for Germany, 1.7 per cent for France, 2.2 per cent for Italy and 6.2 per cent for the United States.

Most economists think tough times are ahead, despite the economy's recent resilience.

"With much of the drag from higher interest rates still to come, we are sticking to our below-consensus forecast that the UK is heading for a mild recession later this year," said economist Ruth Gregory from consultancy Capital Economics.

(Reuters)

More For You

Swiss banks

Funds held in customer accounts by Indian clients rose by 11 per cent in the year to 346 million Swiss francs (£3.14m) and accounted for about one-tenth of overall funds.

iStock

Indian funds in Swiss banks triple to £3.1bn in 2024

INDIAN money in Swiss banks more than trebled in 2024 to 3.5 billion Swiss francs (£3.1bn), attributed to a rise in funds held through local branches and other financial institutions, annual data released by Switzerland's central bank showed on Thursday (19).

However, funds held in customer accounts by Indian clients rose by 11 per cent in the year to 346 million Swiss francs (£3.14m) and accounted for about one-tenth of overall funds, the report showed.

Keep ReadingShow less
Bank of England

In a statement, the central bank pointed to a recent rise in energy prices, citing the 'escalation of the conflict in the Middle East' as a factor.

Getty Images

Bank of England holds interest rate at 4.25 per cent

THE BANK OF ENGLAND (BoE) kept its key interest rate at 4.25 per cent on Thursday, citing persistent inflation and rising risks from US tariffs and the conflict between Israel and Iran.

The decision, which was widely expected, came a day after the US Federal Reserve also left its interest rates unchanged, pointing to continued inflation and slowing growth in the United States.

Keep ReadingShow less
Pakistan army-backed firm joins race for national airline
FILE PHOTO: Passengers board a Pakistan International Airlines (PIA) flight at the airport in Kabul on September 13, 2021. (Photo by AAMIR QURESHI/AFP via Getty Images)

Pakistan army-backed firm joins race for national airline

TWO of Pakistan's leading business groups and a company backed by the powerful military will bid for the country's ailing national carrier, a divestment the government hopes will kickstart the privatisations of state-owned enterprises.

The sale of Pakistan International Airlines will be the first major privatisation for around two decades, with the sale of loss-making state-owned enterprises a condition of last year's $7 billion (£5.5bn) bailout by the International Monetary Fund.

Keep ReadingShow less
Fugitive jeweller Mehul Choksi accuses India of kidnapping
Choksi, accused in a bank fraud case in India, has been arrested in Belgium and plans to appeal for release, citing medical grounds. (Photo: Getty Images)

Fugitive jeweller Mehul Choksi accuses India of kidnapping

FUGITIVE jeweller Mehul Choksi accused India of orchestrating his kidnapping to extradite him on fraud allegations, with his lawyers telling London's High Court on Monday (16) that only India had the motivation and resources to do so.

Choksi – who was arrested in Belgium in April – is wanted in India over his alleged involvement in one of India's biggest bank frauds at Punjab National Bank, which in 2018 announced it had discovered alleged fraud worth $1.8 billion (£1.29bn).

Keep ReadingShow less
Indian entrepreneurs lead America's billion-dollar start-up boom

Jyoti Bansal (Photo: X)

Indian entrepreneurs lead America's billion-dollar start-up boom

A NEW study revealed that India has become the top source of foreign-born founders behind America’s most valuable start-ups, highlighting the country's growing influence in the global technology sector.

Research by Stanford University’s Venture Capital Initiative showed that Indian entrepreneurs have founded 90 "unicorn" companies - start-ups valued at over $1 billion - in the US.

Keep ReadingShow less