U.K. economic growth slowed in the three months through November, strengthening the case for the Bank of England to loosen monetary policy further, the National Institute of Economic and Social Research said.
Gross domestic product probably rose 0.3 percent, less than the 0.4 percent estimated for the quarter through October, Niesr, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement in London today. Output probably won’t reach its pre-recession peak until 2013, it said.
Bank of England officials meet tomorrow for their monthly policy decision as they come under pressure from U.K. businesses to add to stimulus amid threats from the euro-area debt turmoil. All 39 economists in a Bloomberg News survey forecast that the central bank will keep the target for asset purchases at 275 billion pounds ($430 billion) this week after after increasing it in October.
“Economic growth in the U.K. remains subdued,” Niesr said. “These data lend support to the further loosening of U.K. monetary policy.”
British factory and construction growth weakened in November, according to reports last week, and consumer confidence stayed near a 2 1/2-year low. Chancellor of the Exchequer George Osborne said last week that Britain faces two extra years of austerity after the U.K.’s Office for Budget Responsibility slashed its growth projections.
Some Bank of England policy makers have said the deteriorating outlook will probably mean the economy needs more stimulus. Still, Governor Mervyn King has signalled they may prefer to wait until the current round of bond purchases is completed in early February.
The British Chambers of Commerce today reiterated its call that the central bank should increase so-called quantitative easing by 50 billion pounds to help boost sentiment.
“An announcement now would not only strengthen confidence, but would help to counter the downbeat mood which has followed the recent projections by the OBR,” the London-based BCC said in an e-mailed statement.