20th December 2013
The UK’s economy is rebounding at stronger pace than previously thought according to the latest official figures writes Philip Scott.
The Office for National Statistics (ONS) confirmed that UK GDP expanded by 0.8% during the three months to the end of September, unchanged from its initial expectation but year-on-year growth was revised up to 1.9%, rather than 1.5% as previously reported.
Second quarter growth was revised up to 0.8% quarter-on-quarter, from 0.7%, and first quarter growth from 0.4% to 0.5%. In addition the slump in the final three months of 2012 was trimmed to 0.1% from 0.3%.
Howard Archer, chief UK and European economist at IHS Global Insight says: “Given the upward revisions to past growth, we are likely to lift our 2013 GDP growth forecast to 1.5% from 1.4%. Indeed, it is possible that growth could now reach 1.6%. We are also likely to edge up our 2014 growth forecast to 2.7% from 2.6%.”
However amidst the data was the disappointing news that there was a 3% quarter-on-quarter and 1.8% year-on-year fall in exports, larger than the 2.4% quarter-on-quarter drop previously reported.
But confirmation of healthy UK growth in the third quarter and upward revisions to past growth is likely bolster market expectations that the Bank of England will start raising interest rates early on in 2015 and could even act in late-2014 given current sharply falling unemployment.
However, Archer retains the view that the Bank of England is likely to wait until the third quarter of 2015 before acting, barring any nasty inflation developments.