Britain extends growth streak as rate hike flagged

Mark Carney

Economic growth in the UK probably accelerated in the second quarter, as consumers sustained a recovery that’s pushing Bank of England policy makers to consider the first rate increase in eight years.

The 0.7% growth forecast by economists in a Bloomberg survey would mark Britain’s 10th consecutive quarter of expansion. The economy has n’t experienced such a streak since before falling into recession in 2008.

That is likely to come as good news for Irish exporters, as many SMEs continue to look towards the British market. 

The drop in the euro against sterling has made selling into Britain highly competitive. While the recovery is projected to persist, domestic demand is carrying much of the burden and Bank of England governor Mark Carney has warned of headwinds that may limit the pace of expansion.

“The big picture is still that this is a domestically centred recovery,” said Ross Walker, economist at Royal Bank of Scotland Group.

Britain’s Office for National Statistics will publish the GDP report on Tuesday. Data last week indicate retail sales probably contributed to growth in the second quarter.

The strength of sterling continues to drag on exports, with the Bank of England warning it may have an “adverse impact on the balance of growth in the economy”.

With the labour-market improving and wages rising, Bank of England officials have begun to speak more forcefully about raising the benchmark interest rate from a record-low 0.5%.

 


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