UK economy grew 0.9% in second quarter, recovery pace better than first thought

The U.K. economy grew faster than estimated in the second quarter, extending a recovery that’s been more robust than previously thought.

Britain’s gross domestic product (GDP) rose 0.9 percent in the three months from April to June this year, the fastest increase in nine months and above the 0.8 percent previously published, the Office for National Statistics said today. The figures from the ONS include a new methodology for calculating GDP. The new measure includes factors such as spending on research and development, as well as the economic contribution made by drug dealers and prostitutes.

Growth was fuelled by the strongest expansion in Britain’s vast services industry in almost three years, while levels of business investment also rose strongly, the Office for National Statistics said on Tuesday. However, exports were again weak.

The changes to the data may strengthen the case for Bank of England policy makers that it’s time to begin raising interest rates from a record low. While the BOE kept the benchmark rate at 0.5 percent this month, two officials are pushing for an increase. In nominal terms, the economy is now 28 billion pounds ($45 billion), or 6.6 percent, bigger than previously estimated.

The pound appreciated 0.4 percent to 77.80 pence per euro at 11:13 a.m. London time. Sterling fell 0.2 percent to $1.6205.

However consultancy Capital Economics’ economist, Samuel Tombs, said ‘the data was unlikely to change the debate within the Bank of England about when to start raising interest rates’ as it does not ‘change the fundamental picture that the economy’s performance since the recession began in 2008 has been very weak by historical and international standards.”