British third quarter growth revised down
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LONDON, Dec 21 AFP
December 21 2012, 9:34PM
Britain's economy grew by a worse-than-expected 0.9 per cent in the third quarter, downwardly-revised data shows, sparking fresh speculation over a possible "triple dip" recession, analysts say.
"UK gross domestic product (GDP) ... increased by 0.9 per cent between the second and third quarter of 2012, revised from the previously estimated increase of 1.0 per cent," the Office for National Statistics said in a statement on Friday.
The slight downgrade was due to downward revisions to output from production and service industries, and to household consumption. Market expectations had been for no change.
Despite the news, Britain - a member of the European Union but not the eurozone - still powered out of its longest double-dip recession since the 1950s between July and September.
However, third-quarter growth was boosted by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II's Diamond Jubilee
Many experts believe that the British economy could experience a renewed downturn in the current fourth quarter.
"The UK Q3 national accounts confirm that GDP rose strongly in Q3, but we already know that activity in the fourth quarter has been much weaker and think that the UK may already be in a triple-dip," said Capital Economics analyst Vicky Redwood.
"The quarterly rise in Q3 GDP was revised down, but only marginally. Perhaps the most notable revision to the breakdown is that real consumer spending is now estimated to have risen by 0.4 per cent rather than 0.6 per cent. So without the Olympics boost, spending may well have fallen."
Britain sank into the first phase of a double dip recession in 2008 as a result of the devastating global financial crisis that sparked a number of vast banking bailouts.
The economy rebounded in late 2009 but struggled to stage a convincing recovery and fell back into a second downturn in late 2011, which lasted for three quarters, as the eurozone crisis loomed large.
Activity has been hit hard also by deficit-slashing austerity measures from the nation's Conservative-Liberal Democrat coalition government.
The BoE has sought to aid the recovery by slashing its key interest rate to a record low of 0.50 per cent, where it has stood since March 2009, when it also launched its radical quantitative easing (QE) stimulus.
"All in all, the UK appears to be ending 2012 not in particularly great shape," added ING economist James Knightley on Friday.
"As such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013."