Exports in UK Grow at Faster Rate to Boost GDP

economyA surge in exports has helped the UK's economy recover at a rate much faster than what was originally thought between April and June. As per official figures released yesterday, the economy expanded by 0.7%.

The headline growth figure was revised by the Office for National Statistics from its original 0.6% estimate. The growth rate was 0.3% in the first quarter of 2013.

The latest figures have provided huge hopes for the UK's recovery. Also, it encouraged rebalancing of the economy towards trade and investment. Over the quarter, net trade made a significant contribution, almost half, of the GDP growth. It added 0.3% vital points to the figure.

The latest signs of improved growth are good news for the Chancellor George Osborne, but it will further increase pressure on the Bank of England's new forward guidance policy. Governor Mark Carney has vowed to keep interest rates at their record low of 0.5% till the time the unemployment rate falls down to seven percent. According to estimates of the central bank, the targeted fall in unemployment rate will not happen anytime before 2016.

Simon Wells, the chief UK economist at HSBC, said, "While welcome, it could add to the difficulties the Bank of England is having in convincing financial markets about its forward policy guidance". He said that condition could even exacerbate further as the Bank's forecast for Q3 growth of 0.5% seems to be a little low.