UK economy

The Financial Times described the UK economy as ‘stagnant’ following Wednesday’s announcement of 0.5% growth in the first quarter following on from the fall on 0.5% in the last quarter of last year. In the sense that these figures suggest no overall growth in the last six months, the FT could be just about be right. But this is a very superficial judgment and completely ignores what is happening at the sectoral level. The industrial sector is doing extremely well having grown by a total of 1.2% in the two quarters with manufacturing growing by 2.2% and energy by 0.8%. In contrast, the problem area was construction which contracted by almost 7% in the six months. This paints a picture of an economy that is rebalancing with a vengeance and hardly ‘stagnant’ whatever the headline numbers say.