U.K. Economy `Slowed Considerably' in Third Quarter, BCC Says
U.K. Economy Needs 'Forceful' Steps After Slowdown
Chris Ratcliffe/Bloomberg
Among manufacturers, the index of domestic sales declined 13 points to 17 and export sales decreased 7 points to 24.
Among manufacturers, the index of domestic sales declined 13 points to 17 and export sales decreased 7 points to 24. Photographer: Chris Ratcliffe/Bloomberg
The U.K. economy “slowed considerably” in the third quarter, adding to the case for the Bank of England to expand stimulus to prevent a renewed recession, the British Chambers of Commerce said.
Sales at manufacturers and service companies declined in the three-month period and the employment outlook weakened, the group said in a survey published today in London.
The BCC last week called on the Bank of England to increase its emergency bond-purchase plan by 50 billion pounds ($79 billion) by the end of the year to aid the recovery, backing a call by policy maker Adam Posen to expand stimulus. While Britain’s economy grew at the fastest pace in nine years in the second quarter, recent data indicates the recovery is faltering ahead of the government’s budget squeeze.
“The marked slowdown” shows the “importance of making sure the economy is ready for the cuts,” BCC Chief Economist David Kern told reporters at a briefing yesterday. “It is vital to take forceful steps to sustain the recovery.”
The lobby group pushed back its forecast of when the Bank of England will raise its benchmark interest rate from a record low of 0.5 percent to at least August from May and lowered its estimate of economic expansion in the third quarter.
Gross domestic product probably rose 0.5 percent in the three months through September, according to the BCC, which sees the economy growing about 2 percent a year over the next two years. The economy expanded 1.2 percent in the second quarter.
“It wasn’t realistic to expect growth to continue at the sort of pace in the second quarter,” Kern said. “The economy is very probably slowing, but it’s still growing. We’re not talking about recession in the third quarter.”
Demand Weakens
Measures of orders, sales, exports, employment and confidence amongst service companies declined in the third quarter, the BCC said. An index of service-company domestic sales fell 8 points to 4 in the three months through September, while export sales dropped 2 points to 11, the survey showed.
Among manufacturers, the index of domestic sales declined 13 points to 17 and export sales decreased 7 points to 24. The survey covered more than 5,000 companies.
“With the risks of a setback likely to remain serious,” low interest rates are “essential, but not sufficient,” the BCC said. “Reducing the threat of a double-dip recession must be the main policy priority.”
The Office for National Statistics will release third- quarter GDP data on Oct. 26 and the central bank will publish its new inflation and growth forecasts on Nov. 10.
To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
Rate this Page