Britain’s economy grew at its fastest pace in almost a year during the three months to July, boosted by stronger consumer spending due to the World Cup and warm weather, official figures showed on Monday.
Gross domestic product in the three months to July was 0.6 percent higher than in the previous three-month period, gathering pace from 0.4 percent recorded in the three months to June and at the top end of forecasts in a Reuters poll.
This data is likely to reassure the Bank of England which raised interest rates last month for only the second time since the financial crisis, forecasting third-quarter growth of 0.4 percent and a lacklustre 2018 expansion of 1.4 percent.
Britain’s economy has slowed since the June 2016 Brexit vote, its annual growth rate slipping from top spot among the Group of Seven rich nations to jostling with long-term laggards Japan and Italy for bottom place in the rankings.
Monday’s data showed that compared with a year earlier, GDP growth in July alone was up 1.6 percent, while it was 0.3 percent higher than in June, again above poll forecasts for 1.4 percent annual growth and a 0.2 percent monthly gain.
“Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year,” ONS statistician Rob Kent-Smith said.
Consumers in particular have been squeezed by the jump in inflation which followed the pound’s tumble after 2016’s referendum, especially as wages have failed to keep up.
That said, in recent months industry surveys have shown that an unusually warm summer encouraged many Britons to splash out on drinks and pub and restaurant visits.
Last week closely watched purchasing managers’ data pointed to third-quarter growth of 0.4 percent, as a pick-up in services activity outweighed slowing manufacturing and construction activity.
Monday’s data showed that Britain’s dominant services sector grew by 0.6 percent in the three months to July, its biggest rise since January 2017, while 3.3 percent growth in the much smaller construction sector was the fastest since February 2017.
Industrial output, however, contracted by 0.5 percent over the period, hurt by broad-based falls across manufacturing, oil and gas extraction and electricity generation.
Nonetheless, Britain’s trade deficit in both goods alone and goods and services fell to its smallest since February, beating economists’ forecasts in a Reuters poll.
The goods trade deficit dropped to 9.973 billion pounds in July from 10.679 billion the month before, and the total trade deficit in goods and services fell to just 111 million pounds.
Britain’s deficit in goods trade with the European Union was its smallest since April 2016.