Spending by consumers and businesses helped Britain’s economy head further out of recession with the latest quarterly growth figures showing GDP expanded between April and June by 0.6 percent from the previous quarter, and year-on-year grew 1.4 percent.
That is better than the eurozone, but economist Tom Vosa with National Australian Bank said there are other factors to consider.
“Real wages are still negative so in real terms people are still losing money. That will constrain consumption growth and we worry that the 0.6 is more a reflection of PPI refunds being spent. The UK might be about a year ahead of the eurozone. The eurozone now looks as though it’s in the stage where it’s bumping along the bottom.”
The PPI he spoke about is payment protection insurance. Many UK banks were found to have mis-sold that insurance to customers, and have had to compensate them pumping billions into the economy, but that boost will not last much longer.