The British economy did what economists had been expecting as it was confirmed that the nation’s economy grew by 1% in the third quarter, and clawed its way out of the double dip recession. Doubts remain over whether that strength will be able to be sustained.
The confirmation of the expansion will come as a relief to Chancellor George Osborne a week ahead of his mid-year budget statement to parliament. The increase of 1% matched the Office for National Statistics expectations and equalled economists’ predictions.
The figure was helped by the increase in consumer spending over the course of the period with spending rising to 0.6% on the quarter, its biggest increase in two years. The ONS said that the primary reason for the rise was ticket sales in particular being credited for the extra surge in spending.
Exports too were up rising by 1.7% in the quarter whilst imports fell by 0.4%. The services sector grew by 1.3% unchanged from its previous estimate and growth in the industrial sector increased to 0.9%. The Construction sector however fell by 2.6%.
Exports rose 1.7 percent, with net trade contributing 0.7 point to growth. Business investment rose 3.7 percent, the fastest pace since the second quarter of 2011. That contributed 0.3 percentage point.
“While the third-quarter GDP was encouraging and welcome news, the U.K. is by no means out of the economic woods and further relapses remain a very real possibility,” said Howard Archer, an economist at IHS Global Insight in London. “It is looking increasingly questionable whether the economy will grow in the fourth quarter.”
Despite the confirmation of growth the Bank of England is expecting the country’s economy could shrink in the final three months of the year. The Bank has said that it will keep open the possibility of further monetary easing measures if further stimulus is needed.
It is expected that the chancellor will acknowledge the deterioration in the UK’s economic outlook when he delivers his autumn statement, his fiscal watchdog is expected to cut growth forecasts and could force him to extend austerity measures to until 2018.
The Pound to Euro exchange rate is currently trading at 1.2372
The Pound to US Dollar exchange rate is currently trading at 1.6025
The Pound to Australian Dollar exchange rate is currently trading at 1.5296
The Euro to US Dollar exchange rate is currently trading at 1.2949
The Euro to Pound exchange rate is currently trading at 0.8081
Comments are closed.