"This provides some hope that the recovery is gaining breadth even if, as we expect, overall growth slows during the course of this year. Note net exports were positive, but with the pound up and Europe still fragile its persistence may be challenged."
- George Buckley, an economist at Deutsche Bank AG
Trade, consumer spending and investment boosted Britain's economy to a fourth straight quarter of solid growth, suggesting the recovery is getting more balanced and broader-based, supporting the case for the rate hike.
A report from the ONS showed gross domestic product expanded 0.7% in the final quarter, meeting the previous estimate. On an annual basis, however, the economy posted a 2.7% growth, revised down from 2.8% reported in the initial estimate on January 28. The second estimate revealed the expenditure side of the economic output, while the first projection showed only the output components of the GDP. The largest contribution was made by the household expenditure that posted a 0.4% growth over the period, adding 0.3% to the overall growth. The Pound was expectedly resilient after the release of the data, as traders already knew about disappointing figures from the retail sales.
The most welcoming sign is a pickup in investment, as the government seeks for a more rebalanced recovery rather than boosted by a decline in the savings rate. Business investment climbed 2.4% in the final three months, reaching the highest level since Q1 2013 and marking an 8.5% jump in investments since the same quarter a year before.
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