UK 2Q GDP +3.0% YOY; Household Spending Supports

Aug 24, 2007 - The U.K. economy grew at a robust pace in the second quarter of 2007, supported by household expenditure and government spending, data from the Office for National Statistics Friday showed.

In its second estimate of economic output, the ONS confirmed that gross domestic product grew 0.8% on the quarter and 3.0% on the year, unchanged from preliminary figures released last month.

The figures were in line with consensus forecasts of economists surveyed by Dow Jones Newswires, and show that the U.K. economy is still growing above its historical average, which economists believe to be around 2.75%.

The rapid growth, which suggests the U.K.'s economic performance is likely to meet the Treasury's forecast for economic growth of between 2.75% and 3.25% over the whole of 2007, comes despite five rate increases by the Bank of England since August 2006, to 5.75% from 4.5%.

The breakdown of the numbers showed that household expenditure is an increasingly powerful engine behind growth, rising 0.8%, compared with a 0.5% gain in the first quarter, on consumption of both goods and services, the ONS said. Spending was 2.6% higher than corresponding quarter in 2006.

Government spending also grew 0.8%, with the volume of spending now 2.1% higher in annual terms, it added.