GDP figures show UK economy back to pre-crisis levels, ONS reports

The slowdown recently prompted the independent Office for Budget Responsibility to downgrade its annual growth forecast for the UK from 2.5% to 2.4%, following expansion of 3% in 2014.

Speaking before today’s figures were announced, Howard Archer, chief economist at IHS Global Insight, said: ‘The economic fundaments look broadly positive for the UK, particularly for the consumer, and we believe growth will be healthy through the second half of the year.

Strong GDP figures could increase speculation about an interest rate hike being sooner than expected, following Mr Carney’s remarks.

Services output, which makes up more than three quarters of the economy, was up 0.7 percent on the quarter after a 0.4 percent rise in the first three months of 2015.

The business services and finance sector grew by 0.8%, up from 0.1% in the first quarter. Planning and preparation for rising interest rates will mean that anyone who sees their mortgage repayments climb, can help offset the cost through the money they saved over these coming months. Overall, growth was driven by the service sector and the strongest performance on record by the mining & quarrying since 1989.

However, a surge in North Sea oil and gas production lifted overall industrial output by 1% – the biggest increase since late 2010.

Britain’s services sector, which accounts for around 70% of the GDP, grew by 0.7%.

The Confederation of British Industry said on Monday that its index of manufacturing orders dropped to a two-year low in July and that export growth remains “sluggish”.

Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter. He said: ‘The point at which interest rates may begin to rise is moving closer.’.

The main economic indicator for investors on Tuesday will be Britain’s first snapshot of economic activity in the second quarter.

“Assuming the current pace of growth in extraction isn’t maintained, some recovery in manufacturing and construction will be needed to meet the MPC’s (and HSBC’s) forecast of 0.7% growth in Q3”.

The BBC reported that Chancellor George Osborne said the figures showed that the UK was “motoring ahead”, adding that “Our economy is producing as much per person as ever before”.

“But there are clear risks out there in the world economy from the eurozone to what’s happening in the world’s stock markets, and so it’s vital that we stay on the road that we’ve set out on”.

“Growth staying above its past average of 0.6% was a criterion for policy tightening identified by Mark Carney in a recent speech”.

“Accordingly, although today’s data may give some ammunition to the more hawkish elements of the Committee, we still think that a rate rise will be delayed until next year”.