At long last the UK economy has some welcome news. The economy is coming out of the shadows, with a doubling in its quarterly growth rate from 0.3% in Q1 to 0.6% in Q2. The recovery is not quite on dry land yet, but at least it is a step in the right direction. We need a lot more quarters’ growth like this before the Bank of England’s repair work is done. With so much potential stimulus being drained out of the recovery by the government’s austerity programme, the BOE will need to keep applying its monetary balm for a lot longer. There is no chance of a BOE rate hike before 2015 and the odds of additional tranches of Bank support are still high. The UK economy may be coming in from the cold but there is still a fair degree of warming up to do yet.
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