(FT) -- Britain's economy surged in the second quarter of 2010, with gross domestic product expanding by 1.1 per cent, its fastest pace of growth in four years, according to official statistics released on Friday.
The figures from the Office for National Statistics were far stronger than the consensus 0.6 per cent expansion forecast by a Thomson Reuters poll of economists. The economy expanded by 0.3 per cent in the first three months of this year.
"This is an absolutely incredible growth number -- way above all expectations and the best performance since the first quarter of 2006," said Howard Archer, economist at IHS Global Insight. "Furthermore, the pick-up was widespread across all sectors with service sector activity picking up sharply, manufacturing output humming and the construction sector returning to growth with a vengeance".
The pound immediately jumped on the news, rising 0.8 per cent to $1.5372. Gilt yields, which move in the opposite direction to prices, rose sharply. The yield on the 10-year UK bond jumped 6 basis points to 3.41 per cent. The yield on the two-year note advanced 5bps to 0.82 per cent.
Lending to Britain's private non-financial companies fell £1.1bn in June, compared to an average for the last six months of £1.9bn, writes Norma Cohen.
Lending for mortgages expanded but at a slower pace than seen in June, adding evidence to the view that the bounce seen in house prices in the second half of 2009 is now running out of steam, according to the British Bankers' Association. The unexpected rise in GDP is likely to alter the complexion of the discussions within the Bank of England's Monetary Policy Committee, which only two weeks ago discussed whether more needed to be done to prevent growth from flagging too sharply.
CNN
