UK Growth Continuation a 180 from Returning EU Struggles

The euro zone may be struggling to get back on track as Germany falters, but the economy of the United Kingdom is still moving in the right direction even if it is not yet firing on all cylinders at this point.

Growth in the second quarter tracked at 0.8%, about as expected. There was a little more strength in the first quarter than had been registered earlier. The annual rate of growth has been upgraded from 3.1% to 3.2%, and that has become the envy of the Europeans. The majority of this growth has been from the service sector that has been booming at the low and high end of the scale while manufacturing is still at a somewhat below-par performance. Much of the issue with manufacturing is the weakness in Europe, as this has affected the demand for British output. The US has been buying more, but that didn’t rise to a level offset the loss from the European market.

Still, the UK numbers could almost be described as spectacular compared to the data coming from Europe, but that hardly means there is no fragility or precariousness for its ongoing recovery. The consumer in Britain is back to some degree, but the confidence surveys don’t suggest that this engagement can be counted upon to survive bad news. The trends are in the right direction for now. But there is fear is that the possibility of another round of austerity measures would reverse these gains --  that has many watching the Cameron government for clues even as The Bank of England appears determined to keep the economy growing with lower rates.

- Armada Corporate Intelligence

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