Growth upturn 'very encouraging'
The UK economy is recovering faster than thought after official figures showed surging exports helped drive growth 0.7% higher between April and June.
The Office for National Statistics (ONS) revised second quarter growth up from its first estimate of 0.6%, boosted by higher output across construction, manufacturing and parts of services. Economists said the recovery was also looking more "durable" as output was helped by a 3.6% increase in exports and rising business investment.
Growth more than doubled from 0.3% expansion in the first three months of the year and experts said more upbeat data in recent days has fuelled hopes of another strong reading in the third quarter.
The Treasury said the upward revision to gross domestic product (GDP) confirmed the UK is "moving from rescue to recovery". A spokeswoman said: "There is still a long way to go, but the economy is on the right track and the Government is committed to its economic plan that has already cut the deficit by a third and enabled the private sector to create over 1.3 million new jobs."
Markit chief economist Chris Williamson said it was a "very encouraging picture of a broad-based upturn across almost all sectors of the economy". JP Morgan economist Allan Monks added: "The demand side looks even more balanced than we thought, which sends an encouraging message about the longevity of the recovery."
A drop in Britain's net trade deficit - the gap between exports and imports - fell to £3.2 billion in the second quarter from £4.3 billion in the first quarter, and contributed 0.3% to the increase in output.
Net trade has added to Britain's growth for two consecutive quarters for the first time since early 2011. The 3.6% surge in exports was the highest since late 2011, while imports rose 2.5% quarter-on-quarter, marking the biggest gain since the third quarter of 2010.
The ONS said output from the UK's building sites expanded by 1.4% in the second quarter, up from an initial 0.9% estimate as the housing market is ignited by state stimulus schemes including Help to Buy and Funding for Lending. There were also brighter signs from factories, which grew output by 0.7% during the quarter, up from an initial 0.4% estimate.
Services growth overall was unchanged at 0.6%, but within the sector, output from distribution, hotels and catering firms was revised up to 1.7% from 1.5%, while growth across business services and finance was also revised higher to 0.6% from 0.5%. Output from the agriculture sector was also lifted to 1.7% from the 1.1% first estimate.
Spending by households increased 0.4% quarter-on-quarter, boosted by pay and pension contributions growing by 2.4%. That was the highest quarterly pay increase since late 2000, with the spike driven by unusually high bonus payments in April.