ONS: GDP accelerates to 0.7% in Q2

GDP is now 2.6% higher in Q2 compared with the same quarter a year ago, and 5.2% higher than the pre-economic downturn peak of Q1 2008. From the peak in Q1 2008 to the trough in Q2 2009, the economy shrank by 6.0%.

Services increased by 0.7% and production increased by 1.0% in Q2, however construction growth was flat.

Nick Dixon, Investment Director at Aegon UK, commented:

“Robust GDP growth will intensify hawkish calls on the Bank of England to normalise monetary policy sooner rather than later, and consumers should now be braced for a steady stream of rate rises, starting in early 2016.”

However Duncan Kreeger, director of West One Loans, said:

"ONS GDP growth figures show a flatlining construction industry – which doesn’t suggest the miracle of new homes the UK needs. This lack of supply places further price pressure on existing stock and means that prospective homeowners are facing an uphill struggle. We heard plenty of promises before the General Election about how many new homes would be built each year and now is the time for the Government to make good on their pledge. Developers and those reintroducing properties to the UK’s housing stock need lending support to help deliver this. And while short-term providers have taken up some of the slack, high street lenders need to follow suit.”