Britain’s economy is growing faster than previously thought – paving the way for another interest rate rise this summer.
Having previously reported that the economy grew by 0.1 per cent in the first quarter of the year, the Office for National Statistics now says the correct figure is a 0.2 per cent rise.
Output in the services sector, which includes everything from hotels and restaurants to hairdressers and lawyers, was up 0.3 per cent while industrial production increased by 0.4 per cent.
On the up: Having previously reported that the economy grew by 0.1 per cent in the first quarter, the Office for National Statistics now says the correct figure is a 0.2 per cent rise
However, the construction sector shrank by 0.8 per cent and household spending, a key driver of economic growth, increased by just 0.2 per cent. Meanwhile, business investment was down 0.4 per cent.
The report suggested that households are eating into their savings to fund their spending. Saving rates are at the third-lowest level since records began in 1963, the ONS said.
But sterling rose almost 1 per cent against the dollar to a high of $1.3196 as investors bet the upgrade to growth would be enough to convince the Bank of England to raise interest rates to 0.75 per cent in August.
The Bank hiked rates from 0.25 per cent to 0.5 per cent in November, the first increase for more than a decade, and has warned that further moves are coming so long as the economy continues to prosper.
Ruth Gregory at Capital Economics said: ‘We remain cautiously upbeat about the economy’s near-term prospects and continue to think that the monetary policy committee will press ahead and raise interest rates at its next meeting on August 2.’