Strong GDP figures, but help needed to sustain growth
2 September 2015
• GDP quarterly growth in Q2 2015 confirmed at 0.7%, up from 0.4% in first quarter
• Services grew by 0.7%, and production output grew by 0.7% - but manufacturing fell 0.3%
• Business investment rose 2.9% on the quarter, and 5.0% on the year
• The trade deficit narrowed from £13.4bn in Q1 to £9.1bn in Q2, the lowest deficit in two years - as exports rose much more strongly than imports
Commenting on the revised UK GDP figures for Q2 2015 issued today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce, said:
"Although the headline figure of quarterly growth of 0.7% is unrevised from the old estimate, the new details published today are positive and very welcome. We saw strong growth in business investment and a large reduction in our trade deficit.
"While the figures point to some rebalancing in the economy towards investment and exports, it is much too early to be satisfied with where we are, particularly on the trade figures.
"Our current account deficit, which as well as trade includes items such as investment income, remains unacceptably large - at about 6% of GDP. In spite of today's figures, longer term trends suggest that we are still not making sufficient progress towards rebalancing our economy.
"Further measures are needed to sustain growth and boost exports, and the volatile international situation supports our view that it will be too risky to contemplate early interest rate increases."
David Bharier, Business Insight Manager at the British Chambers of Commerce, added:
"The BCC's Quarterly Economic Survey for Q2 2015 reported a fall in the number of manufacturing firms looking to invest in both machinery and training. However, service sector investment has seen a steady level of growth in recent quarters, particularly for training provision.
"The BCC survey also showed that a vast majority of firms from both sectors believed their turnover and profitability would improve in the next 12 months, indicating historically high levels of business confidence."