U.K. business investment grew more strongly than initially estimated in the wake of the Brexit vote last year, while this year's first-quarter economic growth was revised upwards, new figures showed Friday.
The U.K.'s Office for National Statistics said that business investment grew by 0.5% on the quarter and by 2.5% on the year in the April-to-June period, up from the original estimate of no quarterly or annual growth. The quarterly figures for the final three months of last year and the first quarter of 2017 were also revised up. These signs of resilience could boost the chances of monetary tightening in coming months.
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Government statisticians confirmed that the economy posted a quarterly expansion of 0.3% in the April-to-June period, an annualized rate of 1.2%, and revised the quarterly figure for the first three months to 0.3%, up from the original 0.2%.
The Bank of England kept the main interest rate on hold at its all-time low of 0.25% at its last meeting, but policymakers signaled that their patience with above-target inflation was wearing thin. Spurred by the pound's sharp post-referendum depreciation, consumer price growth hit 2.9% in August, a joint four-year high, up from 2.6% in July. BOE officials said an interest-rate increase--the first in the U.K. in almost a decade--is likely "over the coming months."
Economists say that businesses--particularly exporters--will need to take the baton from consumers squeezed by rising prices if the U.K. economy is to avoid stuttering just as Britain's exit talks with the European Union get under way.
However, the ONS said that the U.K.'s current account deficit in the first quarter of the year was wider than initially estimated, and stood at GBP22.3 billion, up from the original estimate of GBP16.9 billion.
The deficit widened even further in the second quarter to GBP23.2 billion, disappointing the expectations of analysts polled by The Wall Street Journal, who expected a gap of GBP16.1 billion.
Write to Wiktor Szary at Wiktor.Szary@wsj.com
(END) Dow Jones Newswires
September 29, 2017 05:18 ET (09:18 GMT)