Saturday, August 28, 2010
UK economy grew 'more than first thought'
The UK economy grew 1.2% in the second quarter, the fastest rate of quarterly expansion since 2001. This expansion occurred at the same time the US had to revise its annual growth estimates down to 1.6% from 2.4%. The Office for National Statistics in the UK feels that the growth in the UK was boosted by the increase in construction output and that the overall effects of quarter were 'very positive'. However, many business leaders have warned that the "strong pace of growth would not last". One business leader argues that the US is a major driver of the global economy and that "we've got to ensure equally that growth in the US will get back on track" since any weakness in the US economy will ripple through to other countries, including the UK. So now it remains to be seen whether the current pattern of growth will remain or be reversed, as well as how the growth or decline of the US economy will effect that of the UK and other countries around the world.
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What is the usual growth rate in the UK? 1.6% still seems low, but if I recall correctly Europe in general does have lower growth rates. Any ideas on what caused a construction boom?
According to UK government statistics (http://www.statistics.gov.uk/cci/nugget.asp?id=192), the quarterly growth rate in the UK was usually less than 1% in the years prior to the recession (2006-2007). 1.6% is actually the highest quarterly growth rate the UK has experienced since prior to Q2 of 2006 (the first recorded on the graph). However, we should keep in mind that this growth is on the heels of major decreases in GDP during the recession, so even though the percentage is higher than prior to the recession, the amount of real growth is relatively lower than the difference in percentages would indicate at first glance.
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