UK economy returns growth in July

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By Euronews  with Reuters
UK economy returns growth in July
Copyright  REUTERS/Simon Dawson/File Photo

Britain's gross domestic product (GDP) increased more than expected in July dampening fears it will succumb to its first recession since the financial crisis as the Brexit crisis escalates.

Economic output in July alone was 0.3% higher than in June, the Office for National Statistics (ONS) said on Monday, marking the biggest rise since January.

The expansion was driven by the dominant services sector, although the ONS said the underlying picture showed its growth weakening through 2019.

The ONS said gross domestic product in the three months to July was flat compared with the previous three-month period. A Reuters poll of economists had pointed to a 0.1% contraction.

The Bank of England forecast last month that economic output would grow 0.3% in the third quarter, although its forecast for zero growth in the second quarter proved to be too optimistic.

Besides the political crisis at home, the outlook for the economy has dimmed further because of trade tensions between the United States and China.

Wednesday's data showed the services sector, which accounts for almost 80% of British economic output, expanded 0.3% in July after four months of stagnation, the biggest upturn since November 2018.

Manufacturing output increased unexpectedly last month, rising 0.3% in monthly terms, while the construction industry also fared better than expected, posting a 0.5% rise in output.