UK economic growth passes pre-crisis peak

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Britain's economy powered on in the second quarter, recording its strongest growth since before the financial crisis, but economists warned the pressure was on UK consumers and businesses to sustain the recovery amid the threat of a triple-dip recession in the eurozone.

Growth between April and June was confirmed at 0.8% by the Office for National Statistics in its second estimate, in line with expectations.

The last time the economy grew by more than 0.8% was the third quarter of 2007, before the global financial crisis took hold. GDP is now 0.2% above its pre-recession peak in the first quarter of 2008.

The annual growth rate was revised up from 3.1% to 3.2% – the strongest in more than six years.

The Treasury said: "Today's figures confirm that our economy has recovered all of the output lost in the 'Great Recession', and is now bigger than its previous peak in the first quarter of 2008.

"The government's long-term economic plan is working, with the economy growing at its fastest annual rate in six years. But the job is not yet done and so we will go on making the realistic assessment of what needs to be done to secure a brighter economic future."

Industrial production was slightly weaker than previously thought, with growth revised down to 0.3% from 0.4%. The construction sector fared better than expected, with output flat rather than down 0.5%.

Growth in the services sector remained unchanged at 1%.

Economists said that the second estimate confirmed that while the recovery became more established between April and June, it would become less balanced in the coming months.

Rob Wood, chief UK economist at Berenberg, said that the economy was likely to be more dependent on domestic demand as weakness in the eurozone – Britain's largest trading partner – and tensions between Russia and the west affect exports. That would be a blow to George Osborne, who has repeatedly stated that an economy less reliant on consumer spending and more reliant on manufacturing and exports is the key to a sustainable future.

Wood said: "Widely spread expansion will get more lopsided over the next couple of quarters as events in Ukraine are weighing on the internationally exposed manufacturing sector, while UK domestic demand continues to expand rapidly.

"We may have to brace for continued weak economic data from Germany and Europe over the next month."

Fears of a triple-dip recession in the eurozone were raised on Thursday after official figures showed the economy in the 18-member region ground to a halt in the second quarter. Worse still, markets were surprised by the news that Germany's economy shrank by 0.2%.

Earlier in the week Mark Carney, the Bank of England governor, made it clear that weakness in the eurozone and geopolitical tensions were threats to the UK recovery.

The ONS second estimate of second-quarter GDP was less complete than it would usually be at this stage, because it delayed publishing details of the spending side of the economy until next month, when it will make wider revisions to past GDP to bring it in line with EU rules.

Powered by Guardian.co.ukThis article was written by Angela Monaghan, for theguardian.com on Friday 15th August 2014 11.53 Europe/London

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