Economic Growth Forecasts Revised Up after Exports Boost for Manufacturers
The estimate of economic growth between April and June was revised upwards yesterday, following better-than-expected output in the manufacturing sector.
It is now thought the UK economy grew by 0.5% in the quarter and by 1.8% on the same period a year earlier - the lowest rate since the start of 2002.
The new figures from the Office for National Statistics compare with a previous forecast of quarter-on-quarter growth of 0.4% and 1.7% for the full year, a return which had been the worst rate for 12 years.
The revision came after output in the beleaguered manufacturing sector was shown to have fallen by 0.3%, compared with a previous forecast of 0.7%. A sharp rise in exports lay behind the revision for the industrial sector.
Economists said the improvement did little to boost the overall outlook, particularly as household spending was shown to have grown by 0.2% in the quarter, following 0.1% rise in the prior three months.
Such a level of expenditure means the UK is on course to grow household spending by 1.5% this year - the weakest annual performance since 1992.
Jonathan Loynes, chief economist at Capital Economics, said the upward revision failed to dent his view that interest rates had further to fall and that Chancellor Gordon Brown required tax rises to bolster the public finances. …