UK in first steps to recovery
Britain's economic recovery still has a pulse - if a weak one.
The country's recovery gained momentum in the second quarter as all its main industries reported faster growth, but some economists warned it was too early to say the country's malaise was over.
Gross domestic product grew 0.6 per cent in the three months to June, the Office for National Statistics said. Growth spanned the service sector, which accounts for about three-quarters of Britain's economy, as well as construction, agricultural and production, which includes manufacturing. It was the first time in three years that all the industries grew at the same time.
"Growth not only accelerated appreciably but is also becoming more broadly based," Howard Archer, an economist at IHS Global Insight said. But he also said that "significant headwinds persist", meaning that the economy "will likely remain prone to periodic losses of momentum".
The report on Britain's slight upturn came a day after data from the long-suffering eurozone also showed some sign of improvement. A survey of purchasing managers indicated that manufacturers in Germany and France had begun increasing production as demand grew, and there was evidence that a credit squeeze for consumers was easing. But there too, the recovery was likely to continue to be fragile.
"Firms are feeling upbeat and are capable of expanding," the director-general of the British Chambers of Commerce, John Longworth, said. "More and more are adopting a 'have a go' attitude when it comes to exporting, which is really encouraging as this will go a long way to driving growth further still."
The telecom company, BT Group on Thursday reported fiscal first-quarter earnings that beat some analysts' forecasts and said the outlook for its business was improving slightly. Low-cost airline EasyJet said its sales rose in the second quarter as it added capacity in Europe.
The economic revival in Britain was also accompanied by a rise in the price of residential property, according to the mortgage provider Halifax. The value of homes rose 0.6 per cent in June to the highest level in almost three years, helped by government measures that assist potential home buyers with deposits.
But some economists said Britain's recovery could start to lose momentum again in the second half of this year. Banks remain reluctant to offer loans, especially to smaller and medium-size companies; real wages have barely moved; and inflation continues to be above the Bank of England's 2 per cent target. A recovery is also closely linked to the strength of the economies of continental Europe, Britain's largest export market, and Asia.
Economists and investors are waiting to hear from Mark Carney, who took over as governor of the Bank of England this month, about his plans to strengthen the recovery. Mr Carney is expected to lay out the central bank's new policy on offering more guidance in early August, when the latest inflation report will be released.