UK economy recovering faster than initially expected new numbers confirm

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.

1 thought on “UK economy recovering faster than initially expected new numbers confirm”

  1. David Lilley says:

    Philip,

    1. If we look at growth in the 12 months to the end of September 2013 we have Q4 (2012) of -0.1%, Q1 of 0.5%, Q2 of 0.8% and Q3 of 0.8%. A total of 2.0% and not 1.9% as computed by the ONS.

    2. If we have 2.0% in the 12 months ended September 2013 we will surely get more than 2.0% in the 12 months of 2013 when it is widely anticipted that Q4 will deliver 1.0 – 1.3%. We will surely get 3.1 – 3.4%?
    3. Why then does ‘Howard Archer, chief UK and European economist at IHS Global Insight say: “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%”.?’

    4. Why then does did the OBR and the BCC both come out with 1.4% just last week?
    5. I have put similar questions to Mindfulmoney posters Simon Ward and Shaun Richard’s. Shaun estimates 1.0% in Q4 and 2.9% for the year 2013 now that Q1 has been increased.
    6. Robert Peston has quoted 3% in two recent posts.
    7. There is a big difference between 1.4 and 3%, a factor of two. That surely demands some investigtion as we, the readers, all make commercial decisions based on these estimates. If it is 3% then we my all choose to go, go, go and make investments and hire nd mke the future brighter. But if it is 1.4% and lots of potential headwinds then we will keep tight on gambling on the future and this will make the future dimmer.
    8. This is Mindfulmoney, the home of Shaun Richards and Simon Ward’s posts. We don’t need to ask Howard Archer. We have an excellent and reliable guide to the future of GDP, narrow money, inflation, output, interest rates and jobs from Simon.

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