The United Kingdom saw growth in the second quarter and its
exchange traded fund (
) is up in the last month. The question now is: can it last?
The United Kingdom grew 1.1% in the second quarter, the fastest
pace in four years. That's the good news. The bad news is that a
research group feels that the growth was a mere "blip." That has
the government undecided as to whether the economy faces inflation
or needs more of a stimulus to keep the tight budget sound,
reports Scott Hamilton for Bloomberg
Many expect the Bank of England to tighten policy.
The Wall Street Journal
, U.K. economic growth for the year will outpace official
estimates. But over the next couple years, the economy may remain
weak because of a sharp reduction in government spending and tepid
consumer spending. [
ETFs for Euro Exposure.
Some of the drag on growth from these two areas will likely be a
direct result of the government's emergency budget,which
included slashing departmental budgets by up to 25% and raising the
U.K. sales tax by 2.5% points to 20%. [
New Leader in the U.K.; A New Leaf?]
Although the United Kingdom was once the trading power and
financial center for Europe, the government has greatly reduced
public ownership and contained the growth of social welfare
programs over the past two years. The nation has large coal,
natural gas, and oil resources, but its oil and natural gas
reserves are declining and became a net importer of energy in 2005,
according to the CIA Factbook
Services, particularly banking, insurance, and business
services, account by far for the largest proportion of GDP while
industry continues to decline in importance.
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iShares MSCI United Kingdom (NYSEArca: EWU)
Tisha Guerrero contributed to this article.