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BCC: Current Account Figures Highlight Major Imbalances in UK Growth

  • GDP growth in Q2 2016 rose by 0.7%, revised upwards from the previous estimate of 0.6%. In annual terms, GDP growth was revised down to 2.1% in Q2 2016, from the previous estimate of 2.2%.
  • The current account deficit widened from £27.0bn in Q1 2016 to £28.7bn in Q2.

Commenting on the third estimate of UK GDP for Q2 2016 published today by the ONS, Suren Thiru, Head of Economics at the BCC, said:

“The upward revision to Q2 growth provides further confirmation that the UK economy grew at a good pace in the run-up to the EU referendum. Although it is encouraging that business investment increased, trade remains a major drag on growth.

“However, the pick-up in growth in the second quarter is likely to be as good as it gets for some time, with the mounting economic and political uncertainty weighing heavily on the UK’s near-term growth prospects.

“While the post-referendum economic data has been somewhat mixed, the overall trend is consistent with a sharp slowdown in growth in the third quarter.”

Commenting on the new current account figures for Q2 2016, published today by the ONS, Suren Thiru, said:

“The widening in the UK’s current account deficit is a concern, and taken together with the growing trade deficit provides further evidence of the persistent weakness in the UK’s external position.

“While the post referendum slide in sterling should help to improve the UK’s external position in the coming months, the size of the UK’s current account deficit means that the country will remain vulnerable to external shocks and changing market sentiment, and risks a further downgrade to our credit rating.

“It is vital that the upcoming Autumn Statement is used to boost business investment and support those firms looking to export into new markets.”

Last modified on Monday, 03 October 2016 10:01

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