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Rate rise expected as UK GDP grows

Wednesday, October 25, 2017 - 01:49

Britain's economy picked up speed unexpectedly in the thrid quarter. As Kate King reports, the new figures are likely to cement expectations that the BoE will raise interest rates next month.

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Britain's finance minister had a spring in his step on Wednesday as data showed GDP unexpectedly rose to 0.4 percent in the three months to June. The figure is a small boost to Philip Hammond, who's been under pressure, just like the UK's consumers with inflation sitting at 3 percent. ( SOUNDBITE) (English) PHILIP HAMMOND, BRITISH FINANCE MINISTER, SAYING: "What it shows is the underlying fundamental strength of this economy." Wednesday's figures stregthen the chances that the Bank of England will push forward with a rate rise when it meets next week. It's concerned the economy can't grow as fast as it used to without generating excess inflation. (SOUNDBITE) English CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "The British economy remains bedevilled not just by the Brexit negotiations which are clearly hampering confidence but also high levels of embedded indebtedness and a difficult composition of the economy we dont produce enough anymore. We have a high dependency on services and we have a high dependency on finance and construction. This is not a cocktail that suggests that we should expect strong growth. Indeed it was the dominant services industry behind the bulk of the good news but manufacturing also contributed, helped by a rebound in car production. While construction continued to struggle, contracting by 0.7 percent on the quarter - its sharpest fall in 5 years. The pound rallied point 2 percent on the news, but remains heavily weighed down by Brexit. (SOUNDBITE) (English) PHILIP HAMMOND, BRITISH FINANCE MINISTER, SAYING: "Sterling has reflected that uncertainty and that has created a temporary spike in inflation now we hope that it is at or near its peak and it will start to fade away as we move into next year and real earnings growth will resume." Hammond will release his annual budget next month. He'll be looking hard for ways to balance the books and public perception.

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Rate rise expected as UK GDP grows

Wednesday, October 25, 2017 - 01:49