Fridays major data release showed the UK economy has slowed after poor overseas trade figures dampened growth, leaving household spending to drive the recovery and casting further doubt on George Osborne’s hopes that strong tax receipts will help him hit ambitious budget targets.
The latest GDP figures showed growth of 0.5% in the third quarter of the year, down from 0.7% in the second quarter. A breakdown of the figures showed net trade, the gap between exports and imports, took a record 1.5 percentage points off quarterly growth.
The figures were at odds with the government’s pledge to re-balance the UK economy towards exports and away from reliance on consumer spending. However, in the latest quarter the weaker trade picture was a result of a jump in imports rather than weakness in exports, economists noted.
Imports rose at the fastest pace in almost a decade, up 5.5% on the quarter, while exports grew a smaller 0.9%. The GDP figures also showed manufacturing output fell 0.4% in the latest quarter, confirming that the factory sector is in recession after three consecutive quarters of contraction. That follows warnings from UK manufacturers that demand from abroad has waned as the global economy slows, led by China and other emerging market countries.
There are no key announcements