UK economic growth rate edges higher

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The UK economy grew by 0.3% in the three months to June, driven in part by a booming film industry, said the Office for National Statistics (ONS),

The initial estimate showed growth picking up from the first quarter of the year, when it was 0.2%.

The ONS said the growth was driven by services, particularly retail, which more than offset falls in output in the manufacturing and construction sectors.

It added there had been a “notable slowdown” in growth from last year.

However, the figure for the second quarter was in line with economists’ expectations.

Analysts said the rise in growth was unlikely to change expectations that the Bank of England will keep interest rates at their current record low next week.

ONS head of national accounts Darren Morgan said: “The economy has experienced a notable slowdown in the first half of this year.”

Film production in the UK, plus box-office receipts from cinemas, was one of the best performing parts of the economy during the period.

“While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth,” Mr Morgan said.

‘Not complacent’

On Monday, the International Monetary Fund downgraded its forecast for UK economic growth this year because of the weak first-quarter figure.

The IMF said it expects UK GDP to grow by 1.7% instead of its previous projection of 2%.

Chancellor Philip Hammond said the UK economy had now grown consistently for four-and-a-half years.

“We can be proud of that, but we are not complacent,” he added.

“We need to focus on restoring productivity growth to deliver higher wages and living standards for people across the country.”

Dennis de Jong, managing director at UFX.com, said that after the first quarter’s “poor” figure, the “slightly stronger” second-quarter figure could “barely be described as a bounce back”.

He added: “The weaker pound is continuing to drag consumer spending down and it’s hard to see growth gaining any momentum heading into the second half of the year. It’s now just the services sector that is saving the economy from flat-lining.

“The UK appears to be heading towards unsavoury levels of inflation and business conditions are struggling amidst heightened Brexit uncertainty.”

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