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GDP confirms UK sailing ahead

Friday, July 25, 2014 - 02:34

Britain's economy is finally bigger than it was before the financial crisis, as GDP grew 0.8% in the second quarter. The IMF predicts the UK will be the fast-growing country in the G7 this year. Joanna Partridge asks what Britain has done better than its euro zone neighbours, still strugging to recover.

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Britain's basking - and the sunshine extends to the economy. GDP grew by 0.8% in the second quarter - and the economy is finally bigger than it was before the financial crisis hit six years ago. After springing back to life last year, the UK's due to be the fastest-growing country in the Group of Seven rich nations this year, according to the IMF. But the recovery's not completely smooth sailing, says Michael Ingram from BGC Partners. SOUNDBITE: Michael Ingram, Market commentator, BGC Partners, saying (English): "There's increasing evidence that business investment is picking up, which of course is extremely welcome. On the other hand you have a relatively weak external environment, very little evidence that net exports are really making much of a contribution. So what are you left with? Well, with the absence of any certainly public investment, you're left with consumption, and that together with low wages is what the Bank of England is currently worrying about when it's cogitating about when to raise rates." Although it's a puzzle for the BoE, economies over the Channel would love to even be considering a rate rise. Even powerhouse Germany could be faltering. Its Ifo survey showed a hefty fall in business confidence in Europe's biggest economy over the past few weeks. Klaus Wohlrabe from the Ifo Institute blamed it on events elsewhere. SOUNDBITE: Klaus Wohlrabe, Ifo Institute, saying (German): "Expectations as well as the current situation were significantly dampened. The main reason is geopolitical tensions around the globe." The survey knocked European shares and the euro - with investors already worried about rising political tensions. It comes after a fall in German industrial output data - leading to fears economic weakness is more persistent, and widespread, than anticipated at the start of the year. France's recovery is so feeble that it is expected to miss an already extended deadline on deficit reduction, according to a Reuters poll. The euro zone's sluggish recovery may have made the UK look more attractive to investors, and there's much to do, says Alastair McCaig from IG. SOUNDBITE: Alastair McCaig, IG, saying (English): "There is major improvements needed, they need to fight inflation figures which have not really managed to recover. Finally they've managed to see the euro weaken, although that's been driven more by the U.S. side of the equation, rather than encouraging noises out of the euro zone." UPSOUND The successful salvage of the Costa Concordia wreck in Italy prompted celebrations. But in the wider economy there's little cause for cheer - and politicians hope it's only the cruise ship, and not the economy, which is headed to the scrapheap.

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GDP confirms UK sailing ahead

Friday, July 25, 2014 - 02:34