UK economic growth slows to 0.5%

Official figures from the Office of National Statistics (ONS) show that UK economic growth slowed more than expected in the third quarter.

Experts had expected to see growth fall slightly from the second quarter’s 0.7% to 0.6% but the new figures show growth had fallen to 0.5%.

The fall in growth is due in part to the performance of the construction and manufacturing sectors.

Construction output decreased by 2.2%, compared to an increase of 1.4% in the previous quarter. In comparison to the same period last year, construction output fell by 0.1%.

Manufacturing output continued to struggle and fell by 0.3%, while mining and quarrying saw an increase of 2.4% and water and waste management rose by 1.2%.

GDP was 2.3% higher in the third quarter when compared with the same period in 2014, which was slightly down on the 2.4% predicted by analysts.

Chris Williamson, chief economist at research company Markit, commented: “The slowdown is being led by the manufacturing sector, which is seeing a renewed recession as output has now fallen for three consecutive quarters, suffering a 0.3% decline in the three months to September,” said Chris Williamson, chief economist at research firm Markit.

“Manufacturing output has so far fallen 0.9% this year. Producers are struggling as weak demand in many overseas markets, notably China and other emerging nations, is being exacerbated by the appreciation of sterling.”

The figures mean that the Bank of England will be under less pressure to increase the interest rates in the near future.

Mr Williamson said: “The third quarter slowdown, and warning lights from recent business surveys about the weakness intensifying in September, suggests that policymakers will want more time to assess the extent of the slowdown as we move into the fourth quarter, effectively postponing any rate hikes until next year.”

Responding to the figures, the Chancellor George Osborne commented: “It is good news that Britain continues to outperform other Western economies but there are clear global risks and there is still much more to do to fix our economy.

“In the Autumn Statement we will take more steps to ensure we feel the recovery right across our country, make the long-term investments for the future and, crucially, continue to make the tough decisions required so that Britain lives within its means.”

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