United Kingdom economy locked onto low growth trajectory

Canary Wharf Ice Rink

However, 0.4 percent is a still below the U.K.'s long-term growth rate, as data suggest 2017 could be the poorest growth year for the British economy since the financial crisis in 2007-2008. Services, led by increases in IT, motor trades and retail, continued to drive GDP growth.

It is also highly probable that, even with a recovery in September, for the quarter as a whole the construction sector will end up being a drag on growth.

This breaking news story is being updated as more information emerges - please refresh the page for the most recent version.

"The figure may also provide support to the Governor of the Bank of England who is looking to raise interest rates this year and a stronger United Kingdom economy should increase the likelihood of this happening".

Peter Dixon, economist at Commerzbank, said that the United Kingdom economy is "running around 0.5 percent per year more slowly than prior to the European Union referendum".

Analysts believe that this unexpectant growth is likely to push Bank of England to raise interest rates on November 2. Gregory pointed out that construction output fell by 0.7 percent quarter-on-quarter, though industrial production was up by a "strong" 1 percent.

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Following the higher-than-anticipated results, the pound gained nearly 0.8 of a cent against the dollar to $1.32 at the time of writing, indicating that City traders are betting on a rate hike next week.

Today's healthcheck on the United Kingdom economy is particularly important, as chancellor Philip Hammond weighs up what tax and spending changes to make in November's budget.

"Yet if rates do rise as expected, the move will be largely symbolic - though it will be the first rise in over 10 years".

Indeed, although the figures show that the United Kingdom hasn't suffered from a Brexit induced recession as some predicted, this still could be the weakest year of growth since the financial crisis. Moreover, the UK's 0.3% growth rate in Q2 was the slowest among all of the G7 nations.

"If the MPC doesn't raise interest rates on 2 November following this preliminary GDP estimate, Mark Carney will be branded as the central banker who cried wolf once too often".

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