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UK economic growth picks up to 0.7% in second quarter



UK economic growth accelerated in the second quarter of the year, helped by a big jump in oil and gas production, official figures have shown.
The UK's economy grew by an estimated 0.7% in the April to June period, the Office for National Statistics (ONS) said.
That compared with growth of 0.4% in the first quarter of the year.
Output in the economy during the second quarter was 2.6% higher than the same period a year earlier, the ONS said.
"After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years," said ONS chief economist Joe Grice.
Oil and gas surge
The economy has now seen 10 quarters of sustained economic growth.
The ONS stressed the first estimate was based on about 40% of the available economic data and is subject to revision.
It said manufacturing output experienced its first fall in two years with output dropping 0.3% in the quarter.
However, a surge in North Sea oil and gas production lifted overall industrial output by 1% - the biggest increase since late 2010.
The "mining and quarrying" component of the industrial output figures, which includes oil and gas extraction, rose by 7.8% in the quarter, the biggest increase since 1989.
The ONS said the increase, which came despite falling oil prices, was driven by tax cuts in March designed to support the sector.
Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter.
The UK's dominant services sector recorded growth of 0.7%, following a rise of 0.4% in the previous three months.
Domestic demand is expected to remain strong, as wages rise and with the temporary effects of low inflation boosting consumer spending.
The ONS said there were also signs that businesses were finally increasing investment.
Nick Dixon, Investment Director at Aegon UK, comments on the 0.7% quarterly rise in Q2 GDP:
"The welcome rise in second quarter GDP points to full-year GDP growth of 2.5% - 3.0%, underscored by improving business sentiment and rising real earnings being enjoyed consumers. Robust GDP growth will intensify hawkish calls on the Bank of England to normalise monetary policy sooner rather than later, and consumers should now be braced for a steady stream of rate rises, starting in early 2016."