How Fast is the UK Growing?
According to the Official for National Statistics (ONS), the UK’s
total economic output as measured by gross domestic product (GDP), rose by 0.8%
between the months of July and September. The ONS commented on how all sectors
have performed reasonably well in the recent times.
While the 0.8% increase might not seem significant, it is for the
UK economy. It is the fastest quarterly growth the UK has seen since 2010,
building on the 0.7% increase after the second quarter. George Osborne,
Chancellor of the Exchequer, said, “[Britain] is on the path to prosperity”
with the Deputy Prime Minister Nick Clegg claiming “we are firmly on the road
to recovery”.
Where is the Growth Coming From?
As the Help to Buy scheme is introduced, created to help
first-time house-buyers obtain mortgages, ONS figures claim construction grew
by 2.5% over the quarter. Additionally, manufacturing grew by 0.9% and the
services sector grew by 0.7%, thanks to the private sector.
The UK economy is largely a service-based economy, with the
service sector accounting for nearly 75% of total output for the economy.
Interestingly, current service output is now 0.4% above the sector’s peak
before the crisis, which was in the first quarter of 2008.
Where the UK Economy Stands Today
Despite all-round growth, these recent figures may well be revised
later on. Even if they are as rosy as they sound though, the shadow chancellor
Ed Balls has said “millions of people across the country [are] still seeing
prices rising faster than their wages” and living standards are still an issue
for many families and households. The UK economy is still around 2.5% smaller
than it was since its peak in 2008 as a whole.
Graeme Leach, the chief economist at the Institute of Directors,
explained “the biggest challenges remain
on the supply side, not the demand side.” He went on to explain that, due to
constraints on the supply side, “the current growth spurt is unlikely to extend
beyond next year.”
What is Next for the UK Economy?
The recent figures are promising, but they do not disclose all of
the story. What comes next is clearly uncertain as always, but the UK certainly
has some work to do yet in order to create a longer, stronger and more
meaningful recovery. Relatively speaking, the UK is still behind other leading economies such as the United States. According
to John Longworth, the director-general of the British Chambers of Commerce, the US economy has
“managed to recover the output lost during the economic downturn.”
Capital Economics economist Samuel Tombs commented on the growth.
He suggested that the UK economy is unlikely to sustain its growth for much
longer due to the lack of real rising wages as inflation rises are outpacing
wage rises. Tombs also mentioned continued cuts in government spending and a
slow euro zone, both of which will apparently contribute to the difficulty of
the UK economic recovery.
On a more positive note, Tombs did say “with employment growing,
confidence returning and productivity still well below its potential, it seems
unlikely that the recovery will fade significantly either”. Mark Carney, the
Bank of England Governor, said that the growth originated from a low base
meaning the underlying economy is still not strong as it should be. Interest
rates will now remain at their record lows of 0.5% for another three years, and
the outlook for further growth now is good, but still cautious.
1 comment:
Can you tell me how much charge banks if i withdraw money from atm machine in uk?
Post a Comment