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Economic growth revised downwards

Economic growth revised downwards

Category: Economy

Updated: 22/12/2010
First Published: 22/12/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The economic outlook has finished the year on something of a low point, after the Office for National Statistics (ONS) revised down growth between June and September.

It had previously been estimated that the UK economy expanded by 0.8% in the third quarter of the year, but this has been downgraded to 0.7%.

UK GDP growth for the second quarter of the year (April to June) was also revised downwards, from 1.2% to 1.1%.

It means that yearly growth has been tweaked down from 2.8% to 2.7%.

The contraction in growth estimates has been blamed on weaker growth in the construction, business services and manufacturing industries.

Sterling fell against the euro and the dollar off the back of the news.

"This is really disappointing news," Mark Bolsom, head of the UK Trading Desk at Travelex Global Business Payments, commented.

"The growth figure in the third quarter gave sterling a massive boost and bolstered trade confidence as well. The revision has taken the shine off the data and markets will be disappointed that UK growth is not as robust as it initially seemed.

"It's a bad end to the year for sterling, as I expect growth to slow sharply next year as spending cuts and tax hikes start to bite."

These latest figures from the ONS will come as a worry to the coalition Government as the UK enters what promises to be a challenging New Year.

There are concerns that the public sector cuts could have greater than envisaged consequences, while recent figures showed a rise in unemployment.

Furthermore, both the British Chambers of Commerce and the Confederation of British Industry have recently downgraded their growth forecasts for 2011, as has the Office for Budget Responsibility – the Government's very own independent forecaster.

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