UK economy growth confirmed


UK economy growth confirmed
Britain's GDP grew by 0.7 per cent in the third quarter of 2006, the Office of National Statistics (ONS) has confirmed.

Growth in the service industries drove the economy, rising by 0.6 per cent, while overall production industry growth stagnated at just 0.1 per cent.

Both the manufacturing sector and construction output growth rose by 0.6 per cent, however.

Financial analysts have suggested that the 0.7 per cent third-quarter growth will force chancellor Gordon Brown to review his pre-budget forecasts of the economy, for today's estimate represents a fall from the previous estimate of 0.8 per cent for the quarter.

Howard Archer of analysis firm Global Insight predicted that overall GDP for 2006 would reach 2.6 per cent.

"The Bank of England expects growth to accelerate to three per cent in 2007, but we suspect that it is more likely to be around 2.5 per cent as the upside is limited by slower global growth and the significant headwinds facing the consumer," Mr Archer said.

"Anticipated modestly softer growth over the coming months, coupled with the increased slack in the labour market, underpins our belief that interest rates are likely to remain at five per cent through 2007."

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