UK GDP: sputtering into life
Nicholas Hyett, investment manager at Wealth Club said:”GDP growth in June was a fair bit stronger than the market had been expecting, put that together with some significant upward revisions to April’s numbers and overall growth for the quarter wasn’t bad at all.
After the tariff induced volatility earlier in the year, the production sector has bounced back, helped by increased defence spending in certain sectors, while the motor industry enjoyed a month of strong sales amid growing demand for electric vehicles.
The government can probably take some credit – with the UK-US trade deal coming into force at the end of June providing some much-needed certainty to UK exporters.
However, it does raise some interesting questions for the Bank of England – where interest rate decisions are on a knife edge. An annualised GDP growth rate of 1.26% is hardly spectacular, but might be better than risking an inflationary overshoot – especially with 4% inflation expected in September anyway. Better leave the economy sputtering into life than risk turbo charging price rises with further interest rate cuts.”