GDP data to show economy picked up in second quarter

 
Jessica Morris
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Economic growth remains domestically driven (Source: Getty)

A preliminary estimate of gross domestic product released by the Office for National Statistics this week will likely show that second quarter economic growth picked up to 0.7 per cent, from 0.4 per cent at the start of this year.

"We expect improved second quarter gross domestic product growth to have been primarily the consequence of a pick-up in services activity and overall marked improvement in industrial production," Howard Archer, chief economist at IHS, said.

"We also expect there to have been healthy consumer spending in the second quarter."

Strong growth could ramp up pressure at the Bank of England to hike interest rates from the record low 0.5 per cent, which they've been held at for over six years.

Recently governor Mark Carney has warned that the rate decision will come into "sharper relief around the turn of this year", and minutes from the rate-setting committee's last meeting showed more policymakers thought it was "finely balanced" with the absence of the Greek debt crisis.

Monetary policy committee (MPC) members Ian McCafferty and Martin Weale have publicly said a tightening labour market and wage growth could soon justify a rate hike. Meanwhile, David Miles said this month that the Bank may raise rates before the US Federal Reserve does.

But others, such as chief economist Andy Haldane, argue that low inflation and global risks such as Greece and China suggest they should wait.

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