Economy On Mend As Higher Growth Is Forecast

The UK economy is expected to have picked up sharply in the second quarter of the year, when official figures are published later.

An expected rise of around 0.6% in gross domestic product (GDP) would double the previous increase of 0.3%.

The predicted rise would be the best performance, excluding special events, since the third quarter of 2011.

Kathleen Brooks, research director at Forex.com said: "Most people in the know expect growth to expand, but there's a question mark over how strong that growth will be."

Shadow chancellor Ed Balls says the growth is "long-overdue"

It was just three months ago that it was feared the UK could enter an unprecedented triple-dip recession, however the recovery is still fragile.

Unofficial surveys published since then have suggested continued improvement, while revisions to Office for National Statistics (ONS) data revealed that the double-dip recession from 2011 to 2012 never happened.

But the revisions turned out to be double-edged, confirming that the initial recession following the financial crisis was far worse than first feared.

It meant the economy was still 3.9% below its pre-crisis peak - with the gap previously thought to be 2.6%.

The US and German economies, by contrast, have recovered their per-crisis levels. France is also near that point.

Officials at the International Monetary Fund (IMF) have added to the ambivalence, raising their forecast for annual growth from 0.6% to 0.9%, but later issuing a gloomy analysis of the UK's prospects.

Meanwhile, the Bank of England's first significant intervention under new governor Mark Carney saw policymakers apparently taking a less rosy view of the outlook than some in the City.

In a rare note issued after this month's meeting of the Monetary Policy Committee, the Bank said: "There have been further signs that a recovery is in train, although it remains weak by historical standards and a degree of slack is expected to persist for some time."

Shadow chancellor Ed Balls said he expected the figures to show that the economy is showing "welcome and long-overdue" signs of growth.

But he warned that most ordinary families will not feel the benefit of the recovery in GDP, because of wages lagging behind inflation.

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