Britain’s economy likely expanded by 0.4 percent in the three months to August, speeding up from 0.2 percent in the three months to July but below its long run trend of quarterly growth of about 0.6 percent.
The Bank of England may raise interest rates in early 2018, the National Institute of Economic and Social Research (NIESR) estimated last week.“If indeed economic growth is sustained at the 0.4-0.5 percent level, we prescribe a 25 basis-point increase in Bank Rate in the first quarter of 2018 to reverse some of the emergency stimulus that the Bank of England injected into the economy last August in response to the EU referendum result” said Amit Kara, head of UK macroeconomic forecasting at NIESR.
The British public’s expectations for inflation remained stable in the three months to early August, a Bank of England survey showed last week, despite this year’s rise in price growth after the Brexit vote.
British consumer price inflation held steady at 2.6 percent in July after reaching 2.9 percent, its highest level in nearly four years, in May. Britain’s Brexit-bound economy is showing little sign that its leaden performance in the first half of 2017 is improving much.
The Office for National Statistics said manufacturing output rose 0.5 percent in July, above economists’ forecasts in a Reuters poll, after car production reversed a dip in the previous month.But growth in the broader measure of industrial output slowed to 0.2 percent. This is in line with forecasts as a lack of summer maintenance of North Sea oil fields boosted production more than usual for the time of year.