IRRV Alert August 4 2008
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UK economy comes to a standstill
UK economy comes to a standstill | |||
UK economic growth ground to a halt between April and June, according to the latest official data. The Office for National Statistics said economic growth was unchanged in the second quarter from the first, revising an earlier estimate of 0.2% growth. It ends a run of 63 consecutive quarters of growth in the UK and is the weakest data since 1992. The figures are likely to raise expectations of a cut in interest rates to prevent a protracted slowdown. The services sector, the backbone of the UK economy, grew just 0.2%, while manufacturing output fell by 0.8%.
The economy grew 1.4% from the same period a year earlier, revised down from an initial estimate of 1.6%. Household spending fell 0.1%. "The figures are very weak and suggest the UK economy is already in recession," said George Buckley, an economist at Deutsche Bank. The economy technically enters a recession when growth shrinks for two consecutive quarters. Bank of England governor Mervyn King has warned that the UK economy is in for a difficult and painful period due to a combination of high inflation and rapidly slowing growth. Rising inflation could make it more difficult for the Bank to cut interest rates to spur the economy. | |||
The figures are very weak and suggest the UK economy is already in recession 