UK economic growth edges up in Q2, boosted by booming film industry

A woman shops in a supermarket in London.
A woman shops in a supermarket in London.PHOTO: REUTERS

LONDON (REUTERS) - Britain's economy gathered only a little speed in the second quarter after almost stalling at the start of the year, propped up by the services sector and a booming film industry, official figures showed on Wednesday.

Growth of 0.3 per cent on the quarter was up from 0.2 per cent in the first quarter, a figure that is likely to cement expectations that the Bank of England will keep interest rates on hold next week at their record low level.

Britain's economy grew 1.8 per cent last year - among the fastest of the world's seven largest major advanced economies, defying widespread predictions of recession after the vote to leave the European Union.

But the Brexit vote did lead to a big fall in the value of sterling, which has pushed up inflation, gnawing at consumers'disposable income this year. "The economy has experienced a notable slowdown in the first half of this year," ONS statistician Darren Morgan said.

The services industry was the only driver of economic growth in the second quarter, helped by retailers, hotels and restaurants, as well as Britain's fast-growing film industry.

The ONS said motion picture activities had grown by 72 per cent since 2014, probably boosted by tax credits introduced by former finance minister George Osborne. The release of blockbuster films in the second quarter also helped.

Growth between April and June in year-on-year terms fell to 1.7 per cent from 2.0 per cent in the first three months of the year, in line with economists' average forecast.

The figures are unlikely to materially alter the analysis of Bank of England officials gearing up to set interest rates next week.

In June the central bank said it expected the economy to grow 0.4 per cent in the second quarter.

On Monday the International Monetary Fund downgraded its 2017 economic outlook for Britain by more than any other rich nation, predicting growth of 1.7 percent compared with an earlier 2.0 per cent estimate. It sees a further slowdown to 1.5 per cent in 2018.

In May alone, services output edged up 0.2 per cent on the month.

The preliminary estimates of GDP do not include a breakdown of spending, and are heavily based on estimated data.