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Uk Service Sector Hits Pre-Crisis Levels

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http://www.theguardian.com/business/2013/aug/05/uk-service-sector-hits-pre-crisis-levels

Britain's dominant services sector enjoyed its best month since before the financial crisis, smashing economists' forecasts for July and boosting hopes the recovery is gathering pace.

The UK services PMI index jumped to 60.2 in July from 56.9 in June, against forecasts of just over 57. A figure above 50 indicates a rise in activity and below 50 contraction. The July reading was the highest since December 2006, when Britain was booming and before the signs of the credit crisis had filtered through.

The recent good weather and pick up in the housing market were drivers of growth, according to the Markit/CIPS survey, and demand was stronger both at home and overseas.

Yes in a questionnaire! The recovery is here!

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Well, if your economy is based around the 'service' of pushing debt, i guess its not surprising.

How we pay it back, thats a different matter.

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Should be just about time for the crash to happen then.

Yep, usually when things are looking 'peaky' and the beeb hacks are delirious with euphoria its a good indication. Highest since late 2006, afterall.

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Well, if your economy is based around the 'service' of pushing debt, i guess its not surprising.

How we pay it back, thats a different matter.

When it comes to UK house prices you can fool all of the people all of the time.. except for a handful of HPCers :(.

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I always thought the service sector was there to service the wealth producers. Seeing how we have far too little wealth generation (as proved by massive borrowing and QE), what does the service sector actually do? I therefore think this upturn in this sector is fake.

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Is this headline from 2004 or 2013?

Debt-fuelled consumers and expensive houses drive British recovery

LONDON (Reuters) - Britain's economic recovery is gaining pace, but its apparent reliance on consumer borrowing and expectations of higher house prices may offer a shaky foundation for lasting growth.

A closely watched gauge of business activity across the services, manufacturing and construction sectors released earlier on Monday hit its highest level since records began in 1998, prompting economists to revise up growth forecasts.

This is welcome news for the government, whose critics have blamed its austerity policies for killing off the recovery that was underway when it took office in May 2010.

But the uncertain nature of economic growth also poses a challenge to the Bank of England, which on Wednesday is expected to take its first cautious steps in providing long-range guidance on future monetary policy.

Economists are now cautiously optimistic about Britain's growth prospects, but they warn that the recovery looks dangerously reliant on consumer demand and is a far cry from the export-led growth that the government, in the shape of finance minister George Osborne, had previously aimed for.

"What we would worry (about) is that we are getting an unbalanced recovery," said Jonathan Portes, director of the National Institute of Economic and Social Research, which revised up its growth forecasts last week.

"It could be sustainable in the sense that growth could go on for a year or two, but over the medium term it would not be what we need," he added.

[...]

Britain's recovery from its last recession in the early 1990s was driven by business investment and exports following sterling's sharp depreciation after it lost its peg against the German mark.

But despite a similar depreciation against the euro in 2008, exports have thus far failed to recover, due in part to Britain's reliance on trade with the struggling euro zone.

Instead, the most recent gains in British economic activity appear to be linked to two factors that helped cause the last global financial crisis - debt-fuelled consumer spending and higher house prices.

Households have been able to raise spending in the face of falling real take-home income by cutting into savings and easier access to credit. Rising house prices have lifted consumer morale and helped restart construction activity.

Both are partly the result of government action. Last year the government and the Bank of England launched the Funding for Lending Scheme, which offers banks cheap finance if they increase lending, and in March Osborne announced a programme that subsidises home purchases.

While Osborne denied on Monday that his housing scheme risked creating a new bubble, many economists are concerned that it will fail to significantly lift supply.

And Portes said that a big fall in Britain's household savings rate either risked reversing sharply, and hurting consumption, or having a longer-term deleterious effect on Britain's ability to invest for future growth.

http://uk.reuters.com/article/2013/08/05/uk-britain-economy-idUKBRE9740P720130805

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It's not sustsainable growth is it ? though the new bank governor has a strategy.

A pre-pproved credit card landed on the door mat today.

Edited by Ash4781

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