UK economy shows slowdown signs

23-01-2008

UK economy shows slowdown signs
The British economy grew by less in the last three months of 2007 than in the previous quarter, new statistics have shown.
 
According to the Office of National Statistics (ONS) gross domestic product (GDP) increased by 0.6 per cent in the final quarter of last year, compared to 0.7 per cent three months earlier.
 
This was 0.1 per cent higher than analysts had expected but still gives fuel to those who predict the British economy will soon experience a slump in fortunes.
 
Last year saw a GDP increase of 3.1 per cent compared with 2006, according to the ONS.
 
"A slight acceleration in production was more than offset by weaker growth in services," an ONS statement said.
 
Total production output went up 0.3 per cent in the fourth quarter, compared with zero growth in the previous quarter, it added.
 
According to the Centre for Economics and Business Research (Cebr), the economy's growth last quarter was the slowest since the third quarter of 2006, which it says "confirms that the economy is slowing down".
 
"Our suspicion is that consumers are cutting back on their spending growth in a more paced manner than what may be expected given the housing slowdown and tightening credit," a Cebr spokesperson said.
 
The thinktank added that "this data may lend a hand" to the global slump on stock markets experienced yesterday.
 
"Yet going forward we expect more sectors to be hit by the tight credit conditions, and for growth to slump significantly in the first half of 2008," it added.
 
The mining, construction, agriculture and telecommunications sectors experienced healthy growth last quarter, while manufacturing remained static for the second quarter running.
 
But business services and finance rose by only 0.4 per cent, whereas it expanded by 1.3 per cent in the previous quarter – a trend the ONS puts down to "weaker growth in computing services and financial intermediation, in particular stock exchange transactions".

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