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UK economy

The coalition government led by David Cameron has been criticised for sticking to a strategy of austerity even though the country was expected to suffer a triple dip recession in early 2013. It was also stripped of its prized AAA credit rating in February 2013.

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ECONOMY

British economic growth revised down to 0.9pc in third quarter

PUBLISHED : Saturday, 22 December, 2012, 12:00am
UPDATED : Saturday, 22 December, 2012, 2:36am

Britain's economy grew by a worse than expected 0.9 per cent in the third quarter, downwardly revised data showed yesterday, sparking fresh speculation over a possible "triple dip" recession, analysts said.

"UK gross domestic product (GDP) ... increased by 0.9 per cent between the second and third quarter of 2012, revised from the previously estimated increase of 1.0 per cent," the Office for National Statistics said.

The slight downgrade was due to downward revisions to output from production and service industries, and to household consumption. Market expectations had been for no change.

Despite the news, Britain - a member of the European Union but not the euro zone - still powered out of its longest double-dip recession since the 1950s between July and September.

However, third-quarter growth was boosted by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth's Diamond Jubilee.

Many experts believe that the British economy could experience a renewed downturn this quarter.

"The UK Q3 national accounts confirm that GDP rose strongly in Q3, but we already know activity in the fourth quarter has been much weaker and think that the UK may already be in a triple-dip," said Capital Economics analyst Vicky Redwood.

"The quarterly rise in Q3 GDP was revised down, but only marginally. Perhaps the most notable revision to the breakdown is that real consumer spending is now estimated to have risen by 0.4 per cent rather than 0.6 per cent. So without the Olympics boost, spending may well have fallen."

"The UK appears to be ending 2012 not in great shape," added ING economist James Knightley yesterday. "We suspect the Bank of England has more work to do."

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