"BoE estimated that the initial estimate of output growth in the third quarter would be around 0.7%, compared with the 0.5% expected at the time of the August Inflation Report"
- September MPC minutes
The nation's key industry- services sector, expanded at a 0.6% rate in the second quarter; however, grew at a modest pace at the start of the third quarter, tempering suggestions the economy will pick up significantly in the second half of the year. While the output in services sector rose 0.6% in the second quarter, providing a significant boost to the economic output, in July the same indicator rose by just 0.2% on a monthly basis, while on a yearly basis it expanded 1.8%, 1.0% lower than the prior month's rate. The main contributors to growth were business services and finance sector, while restaurants and hotels enjoyed reasonable growth as well. Nevertheless, the downside pressure came from transport, storage and communication sector, partially offsetting strong gains in the previously mentioned sectors. Services sector is the biggest industry and is accounting for about 78% of total output, meaning its performance is a key to the overall economy's prospects.
Meanwhile, amid rising speculations of a growing housing bubble, Chancellor of the Exchequer George Osborne prompted to introduce annual checks with the BoE over its programmes. Britain's authorities will reassess the Help-to-Buy programme, which helps to buy homes with as little as a 5% deposit. Both Carney and Osborne have already agreed the recent performance of the propriety market represent a broadening recovery, however the government should remain vigilant and there is not time for complacency.
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