According to a report from the Wall Street Journal,"the U.K. economy has finally broken loose from its stagnation of the past few years. Gross domestic product expanded 0.8% in the third quarter, the fastest pace of quarterly growth since the second quarter of 2010. Growth has accelerated for three straight quarters, again for the first time since 2010. But now comes the real test: Will growth that is being driven by consumption spread to investment?"
"The crisis years have, if anything, increased the dominance of the service sector in the U.K. Services output is now above prerecession levels in real terms, but construction is still 12.5% down from the first quarter of 2008 and industrial production is down 12.8%,ING notes. And in the third quarter, services grew 0.7% while industrial output grew 0.5%.
Typically, this would be the point in a recovery where business investment should pick up.
Indications are mixed. The third-quarter survey conducted by Deloitte of U.K. chief financial officers showed a record 54% saying that it was a good time to take risk; business confidence has risen and financial and economic uncertainty has fallen. But the CBI's Industrial Trends Survey showed plans for spending on plant and machinery falling in the third quarter, while export orders are only edging higher''.
The U.K. has followed an agressive expansive monetary policy, with very low interest rates,buying bonds,supporting banks' ability to lend, the government is providing mortgage subsidies through its Help to Buy program.
The the risk is for a high inflation and/or a bubble in the housing market
"The crisis years have, if anything, increased the dominance of the service sector in the U.K. Services output is now above prerecession levels in real terms, but construction is still 12.5% down from the first quarter of 2008 and industrial production is down 12.8%,ING notes. And in the third quarter, services grew 0.7% while industrial output grew 0.5%.
Typically, this would be the point in a recovery where business investment should pick up.
Indications are mixed. The third-quarter survey conducted by Deloitte of U.K. chief financial officers showed a record 54% saying that it was a good time to take risk; business confidence has risen and financial and economic uncertainty has fallen. But the CBI's Industrial Trends Survey showed plans for spending on plant and machinery falling in the third quarter, while export orders are only edging higher''.
The U.K. has followed an agressive expansive monetary policy, with very low interest rates,buying bonds,supporting banks' ability to lend, the government is providing mortgage subsidies through its Help to Buy program.
The the risk is for a high inflation and/or a bubble in the housing market
