GDP growth and consumer confidence boost UK economy

Better-than-expected GDP figures and a 15-year high in consumer confidence have both boosted the UK economy.

There has been a double boost for the UK economy yesterday (June 30th), with statistics revealing not only that growth has been stronger than expected this year, but that consumer confidence has jumped.

The Office for National Statistics says that gross domestic product (GDP) expanded by 0.4 per cent in the first quarter of 2015, greater than the 0.3 per cent it initially estimated.

It also revised growth for 2014 upwards, from 2.8 per cent to three per cent, with a change in the way it makes calculations for the contribution of the construction industry the reason behind the increases.

Chief economist at PwC John Hawksworth was quoted by the Financial Times as saying an "upturn in real earnings" and employment growth have helped the economy.

"Despite the thunderclouds gathering over Greece, domestic demand in the UK remains relatively strong," he remarked, adding there is a chance the UK's economy could grow the fastest of all the G7 nations this year.

The second piece of positive news came from market research firm GfK, whose consumer confidence index rose six points in June to a high not seen for over 15 years.

GfK's index reflects an increase in the number of shoppers making big purchases, which suggests consumer spending is on the up.

Head of market dynamics at the firm Joe Staton was quoted by the Financial Times as saying there is a "spring in the step of consumers across the UK" at present.

This latest increase means GfK's index has now been in positive territory for six consecutive months; however, Scotiabank economist Alan Clarke warned things could be "more challenging" in 2016, as rising inflation, a possible interest rate rise and more fiscal tightening kick in.