UK Annual Growth Beyond Expectations

The UK economy has grown at a faster rate than analysts had expected over the second quarter on an annual basis, according to official figures released today.

The figures released by the Office of National Statistics this morning reflected growth of 0.8% in the second quarter of 2007, taking the annual growth rate up to 3.1%, beyond initial forecasts of a 3% growth for the period.

Analysts have welcomed the news, suggesting that it is unlikely to prompt any additional fears about inflation that could see the Bank of England further raise interest rates in the coming months.

The Bank of England had previously been expected to raise interest rates to 6% by the end of the year with some certainty. However, the rapid response of the economy to five successive rises earlier in the year saw inflation pulled within official targets to eradicate the need for any further rate cuts.

It is expected that the Bank of England will be more interested in gaining a better picture of the level of impact recent global externalities have had on the UK market, which until now appear to be minimal, rather than dwelling on the potential inflationary pressures of better than forecast growth.

The US sub-prime crisis has unsettled stock markets and both investor and consumer confidence across the world, which it was thought would clearly negatively impact on growth figures and global economic health.

However, there appears to be no sign as of yet that the sub-prime crisis or indeed the credit crunch has had any direct or indirect effect on the performance of the UK economy in recent months.

The news was well received on the stock market in early morning trade, with the FTSE 100 writing off most of yesterday’s losses, up 58.7 to 6455.6 by early afternoon.

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