Britain's economy looks unlikely to pick up speed from the meagre growth rate of the second quarter as worried consumers cut back on spending and the global outlook turns gloomier. With the government's hands tied by tough austerity measures aimed at erasing a huge budget deficit, the onus to boost growth lies with the Bank of England, though a fresh round of monetary stimulus still looks unlikely for the time being.
The economy grew by just 0.2 percent in the second quarter, taking annual growth to 0.7 percent, the Office for National Statistics said on Friday, confirming preliminary estimates. "The main concern is whether the soft patch will turn into something more protracted," said Markit economist Chris Williamson.
"The business and consumer surveys indicate that growth most likely remained lacklustre in July and August," he said, adding that he again expected an expansion of only 0.2 percent between July and September. A number of special factors hit growth between April and June, including an extra holiday for the royal wedding and supply chain disruptions in the aftermath of March's earthquake and tsunami in Japan. The ONS said those factors shaved up to 0.5 percentage points off quarter-on-quarter growth and analysts expect some of this to be recovered in the third quarter.
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