Growth Of UK Economy In Q3

28 Oct 2010

According to official figures, Britain’s economy grew by 0.8 percent in the 3rd quarter and this is twice as fast as expected. The economic output is now 2.8 percent higher than the 3rd quarter of 2009.

The Office of National Statistics said, ”The growth followed a rate of 1.2 percent, a nine—year high, in the second quarter, when restocking of inventories and construction surged. The combined expansion was the strongest back—to—back performance by the British economy in a decade.

Prime Minister David Cameron’s government got more good news as Standard & Poor’s Ratings Services upgraded its outlook for British debt from “negative” to “stable”, indicating no threat of a downgrade, and reaffirmed the AAA rating on long—term debt.

Economist James Knightley said, “This is the second major GDP growth surprise in a row and suggests that the U.K. economy is more resilient than many had feared.”

“The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening, we remain cautious.”

To stimulate the economy, the growth will ease pressure on the Bank of England to expand its programme of asset purchases, or quantitative easing. The service industries output grew by 0.6 percent which is matching the manufacturing and production industries. And, the construction activity was up by 0.4 percent in the third quarter.

Analysts warn that the fiscal tightening, combined with tight credit conditions and slow global growth, will dampen growth significantly in coming quarters.