Growth in Gross Domestic Product Surprises Analysts
An extraordinary surge in service sector output helped the UK to avoid going into recession at the end of last year, despite a sharp contraction in manufacturing, according to official figures.
Independent economists were surprised at a 0.2% growth in gross domestic product, as many were suspecting there would be zero growth. Service sector output accelerated from 0.6% to 0.9% in the third quarter of 2001. Losses in transport and hotels following the US terrorist attacks of September 11 were outweighed by gains in business and financial service plus possible growth in the public sector according to early estimates. The gains in business and financial services came as a surprise after widespread gloom about falling profits and job losses.
Despite a sharp slump in manufacturing the UK economy appears to have avoided recession, largely due to growth in consumer and government spending.
For all of 2001 the economy grew by 2.4% which is almost certainly the strongest growth of the Group of Seven nations. The UK Treasury, which was criticised last year for forecasting growth of 2.25% to 2.75%, was quick to take credit for the performance.
National Statistics, which produced the data, reported strong growth in health and education, which are both areas at the heart of the UK government's plans to boost state spending.
The report also said there was an "unusually strong increase" in recreation, sport and cultural activities. Economists said the gross domestic product data meant it was likely interest rates would rise this summer.
The Daily Telegraph
The service sector data was at odds with recent surveys and anecdotal evidence, leading to speculation that they might be revised downwards in the future. Preliminary estimates from the Office for National Statistics on Friday revealed that UK economic growth slowed slightly to an annual pace of 1.9% in the fourth quarter last year, from 2.2% in the third quarter. Although the 0. …