Britain: A Tricky Rate Cut Is In The Works

Britain's economy is slowing by more than was expected. But a move by the Bank of England to cut interest rates to lift growth may not be a smooth process.

British real gross domestic product increased just 0.3% in the fourth quarter from the third. That was the lowest quarterly growth rate in two years (chart), going back to when the world financial markets were in a liquidity squeeze. Real GDP grew 2.4% in 2000, compared with 3.2% in 1999. For now, real GDP is expected to grow 2.5% for 2001.