A ray of sunshine at Christmas? UK growth revised up
By Ian Dunt Follow @IanDunt
There was a minor but unexpected bit of good news this morning, as UK economic growth was revised up to 0.6%.
The figure, which relates to the third quarter of 2011, is up 0.1% on previous forecasts.
Unfortunately it was accompanied by growth estimates for the second quarter being revised down from 0.1% to zero by the Office for National Statistics (ONS).
Analysts played down the result, saying it primarily reflected a bounce-back from temporary weakness in the second quarter, when the extra bank holiday and the knock-on effects of the Japanese earthquake stifled growth.
"The data available so far suggest that the economy probably stagnated in the fourth quarter, which is in line with the Bank of England's current estimates, and there is a growing likelihood of a slide back into recession in the new year," said Chris Williamson, chief economist at Markit.
"The UK nevertheless looks to have outperformed the Eurozone in the fourth quarter, which is likely to have contracted by around 0.5%, and matched the performance of Germany, for which survey data also point to stagnation."
Strong performance in the service sector and construction drove the third quarter growth. Household consumption was unchanged but disposable income rose by 0.3%.
"Only a complacent chancellor would take comfort in figures showing just 0.5 per cent growth in the year since his spending review," said Rachel Reeves, shadow chief secretary to the Treasury.
"This compares to an upwardly revised figure of 3.0 per cent growth in the previous twelve months when government policies were supporting rather than undermining the economic recovery."
The report came too late to affect a poll showing Brits are among the most pessimistic people in the world when it comes to the economy.
An Ipsos MORI global adviser poll conducted in 24 countries found only Hungarians, Japanese, Belgians and the French were more pessimistic.
Just one in ten Brits expect their local economy to improve in the next six months.
"The UK ends the year much as it started – bumping along the bottom of the international confidence table," said Ipsos MORI managing director Bobby Duffy.
"This adds to the picture of a gloomy 2012, as we know consumer confidence has a direct relationship with real economic outcomes."
Even the Spanish, who are undergoing a chaotic and desperate phase in their development, are more optimistic, with 17% expecting an improvement.
By the far the most optimistic of the 24 countries was Brazil, with 72% expecting improvement.
Brits were also reluctant to describe their country as having a "good" economy, with just ten per cent choosing this option, compared to 72% in Sweden and 64% in Germany.
