The British Chambers of Commerce has welcomed the most recent preliminary gross domestic product figures, but it says that infrastructure investment remains vital.
Released by the Office for National Statistics last week, the figures show that GDP growth in the second quarter rose to 0.6%, from 0.4% in the first quarter. Manufacturing grew by 1.9%, while production overall grew by 2%, Machinery Market reported.
Suren Thiru, head of economics at the BCC, said: “The better-than-expected pick-up in GDP growth in the second quarter shows that the UK economy was in decent shape in the run-up to the EU referendum.
However, this is only the first estimate, and our own survey data suggests that growth may have been closer to the figures for the first quarter.
“The significant contribution made by the manufacturing sector is particularly encouraging, but the improvements were from a low base, and the UK economy remains reliant on the service sector to drive growth.
“It is far too soon to draw firm conclusions about the effect of the EU referendum result on the UK’s future growth prospects, but addressing the long-standing under-investment in Britain’s infrastructure in business-critical areas such as transport and broadband will be vital in driving long-term growth.”
Local Authorities Worried
A government plan to overhaul how local authorities invest their workers’ pension money is meeting opposition from some trustees worried they will be forced to accept low returns for funding new roads, railways and other capital projects.
The government has proposed merging nearly £200 billion ($280 billion) of local authority retirement savings into investment pools to help pay for improvements to Britain’s infrastructure. It is also wooing other investors such as insurance companies who want secure, long-term revenue streams, Reuters reported.
While several years in gestation, the plan has taken on greater importance since Britain’s vote in June to leave the European Union, with new Prime Minister Theresa May looking for lasting remedies to support an economy facing a period of stagnation and weak growth.
But there is opposition to the ambitious scheme among the stewards of 89 Local Government Pension Schemes in England and Wales, who together manage the retirement savings of more than five million people.
The government says its plan will help them to trim costs and improve returns when many are struggling to plug deficits caused by weaker returns on staple bond and stock investments.
