By Lydia Tomkiw -
The British economy grew for the tenth consecutive quarter with the gross domestic product increasing by 0.7 percent, according to figures released Friday by the Office for National Statistics. Exports helped drive the growth rising 3.9 percent over the previous three months.
The statistics released Friday for quarter two cover the period from April to June 2015. Global economic uncertainty following China's “Black Monday,” when the Chinese stock market plunged following the devaluation of the country’s currency with the Dow Jones Industrial Average falling by 1,000 points before slightly recovering, could have an effect going forward for the British economy.
Increases in oil and gas production, household consumption and the service sector have all helped to ensure growth. Government expenditures remained steady for the second quarter at 0.9 percent.
Low oil and food prices have kept inflation at a low level giving British citizens room to spend with household consumption expenditure up by 0.7 percent, the 16th consecutive quarter of increases. Output from hotels and restaurants also increased by 1 percent this quarter.
While trade has helped the British economy continue its growth, growing by 1 percentage point, it’s unclear if it will remain strong. The strength of the British currency is making the country’s goods more expensive abroad at a time of economic uncertainty stemming from China and lower demand in Asia and Europe.
The strong economy has edged the Bank of England toward an interest rate increase, as well as a tighter monetary policy. However, market volatility this week has made the timing of any increase uncertain. Speaking with Bloomberg Television, Liz Martins, an economist at HSBC Bank, underscored that economic volatility this week may slightly push back a decision by the Bank of England.
“There’s been some turmoil and from the market perspective, expectations have been pushed back a bit, but I think it’s possible that some of those expectations have been overdone,” Martins said.
A senior economist at Capital Economics told the Financial Times that low inflation in Britain and wage growth bodes well for the rest of 2015. “The economic recovery will sustain its current pace in the second half of 2015,” said Samuel Tombs.