BCC: Positive growth continues but recovery must be nourished
- GDP growth in Q2 2014 was 0.8%, the same increase as in Q1
- The level of GDP in Q2 2014 was 0.2% higher than its previous peak in Q1 2008
- Year-on-year increase in Q2 2014 was 3.1%, marginally higher than in Q1
- The service sector led the recovery with quarterly growth of 1.0%
- Manufacturing output rose by 0.2% in Q2 2014, while construction recorded a fall of 0.5%
Commenting on the preliminary GDP estimate for Q2 2014, published today by the ONS, John Longworth, Director General of the British Chambers of Commerce (BCC) said:
“The fact that Britain’s economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike.
“Yet even though we’re one of the fastest-growing developed economies, there’s no room for complacency. Without sustained action, these growth figures could be ‘as good as it gets’ for the UK. The government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren’t seen as a safe bet by the banks.
“Above all, interest rates need to stay low for as long as possible, and rise slowly and predictably when they do go up – to avoid undermining the solid business confidence that’s driving the growth we’re seeing in businesses across Britain.”
David Kern, Chief Economist at the BCC, added:
“The 0.8% quarterly increase in GDP confirms that the UK economy is continuing to expand at an encouraging pace. The service sector remains the main driver of the recovery and the economy is still heavily reliant on consumer spending. While it is welcome news that we have surpassed the pre-recession GDP peak of Q1 2008, this has occurred much later than in some of our major competitors, such as the US and Germany.
It is important that we work to increase the contribution of exports and investment if this recovery is to become truly sustainable. In order to support the businesses driving the recovery the MPC must provide assurances that interest rates will not be raised until there is a clear case to do so.”