UK economy grows 0.6 per cent in second quarter

It seems that the UK economy has grown by 0.6 per cent in the second quarter of the year compared to the first quarter as the recovery picks up pace which is great news.  After 0.3 per cent growth in the first quarter it is the first time the UK has seen two quarters of growth since 2010.

All economic data has pointed to a strengthening recovery with growth in all four key industrial area of agriculture, services, production and construction.

The biggest boost comes from 0.9 per cent growth in construction which has seen collapsing output in the last few years.

In Q1 2013 construction had hit its lowest levels since Q1 2001 showing it has a long way to climb and make up lost ground from the recession.

It is also a sign that Government schemes are beginning to have an impact by injecting confidence back into the veins of UK business and mortgage borrowers.

The first instalment of the Help Buy scheme, designed to help borrowers and first-time buyers access 95 per cent loan to value mortgages on new build properties, has been booming.
It has seen 7,000 reservations and 1,000 sales in the first four months since it launched in April after the Budget.

There have also been major boosts to construction from the Government's homebuilder's fund, Build to Rent project and liberalisation of planning rules.

There have also been a series of infrastructure projects pencilled in for the next few years such as high speed rail 2 which can have an immediate impact on business sentiment.

Chancellor George Osborne revelled in the figures as he plans to fight the next election on the back of a growing recovery. He said: “These figures are better than forecast. Britain is holding its nerve, we are sticking to our plan and the British economy is on the mend - but there is still a long way to go and I know things are still tough for families. “So I will not let up in my determination to make sure we put right all that went wrong in our economy. Unlike the unbalanced economy before the crisis, we are going to make sure that everyone benefits from this recovery.”

Future Growth

The Bank of England is predicting sustained growth in the next few years on the back of consumer spending and rising house prices.

House prices rises and a major leap in available mortgages and lending have helped drive growth this year and will continue to do so for the coming months.

The drastic reductions in mortgage rates this year has also acted as a massive stimulant to the economy as home owners use disposable income to boost output in other areas.

There is a major note of concern about the growing political and economic optimism about a Uk recovery.

Even 0.6 per cent growth is much slower than rates over the last 10 years and the UK is still much smaller than before the recession.

From peak to trough the UK economy shrank 7.2 per cent but instead of quickly making up the lost capacity it has stuttered back to life. It is still 3.3 per cent smaller than its pre-recession high.

Economists say it is an enormous 15 per cent smaller than it would have been had it continued to grow at the same pre-2008 rate.

In addition the current growth projections are all tempered by the risk of global economic shocks from the eurozone, a slowing Chinese growth rate or rising interest rates.

Despite the caution, confidence is returning for business investment, home owners, economists and policymakers.

If you're looking to buy or move you can do so in the knowledge the UK is emerging from its troubles and entering an era of consistent growth.

The calming Uk economic environment should give people more confidence to make investments in the housing market alongside an uptick in construction, lending and prices.