U.K. Recovery Seen at Risk as Rebalancing Eludes Economy
Britain’s consumer and housing-driven recovery, the fastest among Group of Seven nations, risks losing steam unless export growth picks up, economists said.
While the economy grew the fastest in more than two years in the three months through September, the expansion was led by consumer spending, construction and stock building. Net trade knocked 0.9 percentage point off GDP, the most since the second quarter of 2011.
Bank of England Governor Mark Carney this week extolled the strength of the economy’s revival, while acknowledging that weak growth in the euro area may weigh on the export outlook and limit rebalancing of the economy. Part of the domestic demand is linked to a revival in the housing market, which has fueled concerns of a brewing bubble. Carney will address those risks at a press conference in London today.
“The consumer is a big part of the economy, so it’s always going to be an important component of growth but it shouldn’t be the sole component,” said Carl Astorri, senior economic adviser to the EY ITEM Club. “To get the stronger recovery that we’re forecasting for next year does rely on it broadening out.”
The U.K. economy grew 0.8 percent in the last quarter, the Office for National Statistics said yesterday. Investment in private-sector dwellings climbed 5.9 percent, the most in two years. Consumer spending increased for an eighth consecutive quarter. Exports, which account for about one third of the economy, fell 2.4 percent, the most in more than two years.
While the economy grew the fastest in more than two years in the three months through September, the expansion was led by consumer spending, construction and stock building. Net trade knocked 0.9 percentage point off GDP, the most since the second quarter of 2011.
“The consumer is a big part of the economy, so it’s always going to be an important component of growth but it shouldn’t be the sole component,” said Carl Astorri, senior economic adviser to the EY ITEM Club. “To get the stronger recovery that we’re forecasting for next year does rely on it broadening out.”
The U.K. economy grew 0.8 percent in the last quarter, the Office for National Statistics said yesterday. Investment in private-sector dwellings climbed 5.9 percent, the most in two years. Consumer spending increased for an eighth consecutive quarter. Exports, which account for about one third of the economy, fell 2.4 percent, the most in more than two years.
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