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UK economic growth accelerates to 0.7% in second quarter driven by big jump in oil and gas production

UK economic growth accelerates to 0.7% in second quarter driven by big jump in oil and gas production
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(BBC) - UK economic growth accelerated in the second quarter of the year, helped by a big jump in oil and gas production, official figures have shown.

The UK's economy grew by an estimated 0.7% in the April to June period, the Office for National Statistics (ONS) said.

That compared with growth of 0.4% in the first quarter of the year.

Output in the economy during the second quarter was 2.6% higher than the same period a year earlier, the ONS said.

"After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years," said ONS chief economist Joe Grice.


The economy has now seen 10 quarters of sustained economic growth. 

Oil and gas surge

The ONS said manufacturing output experienced its first fall in two years with output dropping 0.3% in the quarter.

However, a surge in North Sea oil and gas production lifted overall industrial output by 1% - the biggest increase since late 2010. 

The "mining and quarrying" component of the industrial output figures, which includes oil and gas extraction, rose by 7.8% in the quarter, the biggest increase since 1989. 

The ONS said the increase, which came despite falling oil prices, was driven by tax cuts in March designed to support the sector.

Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter.

The UK's dominant services sector recorded growth of 0.7%, following a rise of 0.4% in the previous three months.

Domestic demand is expected to remain strong, as wages rise and with the temporary effects of low inflation boosting consumer spending. 

The ONS said there were also signs that businesses were finally increasing investment. 

The first estimate of GDP is based on about 40% of the economic data used in the final output estimate and is subject to revision. The second estimate is due in about a month's time.

Interest rates

The latest growth figures come amid mounting pressure for a rise in interest rates following five years of rates sitting at the historic low of 0.5%.

They also come a fortnight after Bank of England governor Mark Carney suggested households should prepare for a rate rise towards the beginning of next year.

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