Retail boost for economy but growth doubts linger

Theresa May

Theresa May

"The economy picked up a little in the second quarter with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year", said Rob Kent-Smith, ONS head of national accounts.

Economic growth in the United Kingdom picked up in the three months to June as construction and services were lifted by the warmer weather.

Gross domestic product - the value of all goods and services produced in an economy - grew 0.4 per cent in the three months to the end of June, the Office for National Statistics (ONS) said in a statement. United Kingdom economic growth lags that of other major industrialized nations amid uncertainty over Britain's departure from European Union.

Compared with a year ago, the economy stood 1.3 percent larger in the second quarter, only a touch above a almost six-year low touched in the first three months of the year. Net trade was the biggest drag on the economy since the third quarter of 2016. "Overall we judge that the economy's performance in Q2 was a touch disappointing, bearing in mind the support to growth from a double weather whammy of a recovery from a cold Q1 and a boost from a warm Q2", Investec chief economist Philip Shaw said. Britain's government has yet to agree a divorce deal with Brussels and has stepped up planning for the possibility of leaving the bloc without any formal agreement.

But the positive trend was offset by a 0.8% reduction in production, the weakest quarterly growth since Q4 2012.

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But growth slowed on a monthly basis, with GDP rising just 0.1 per cent in June, down from 0.3 per cent in May and lower than the 0.2 per cent growth logged in April.

The ONS noted that the figures included the "second consecutive quarter of negative growth in manufacturing", meaning the sector was technically in a recession.

However, the ONS added that underlying growth remained "modest". Retailers in particular have struggled.

Services industry output grew 0.5% and construction output increased 0.9% on the first quarter, while industrial production decreased 0.8%.

"Indeed a rather less than encouraging assessment of the UK's economic prospects can be found in the performance of the pound, which has slipped back below $1.30 against the dollar in the last week, despite a rise in United Kingdom interest rates".

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