Economists expecting more cheer for the UK

Figures likely to show the UK economy has enjoyed a third successive quarter of improved growth should give a fresh boost to Chancellor George Osborne

Stefan Rousseau/PA Wire Chancellor George Osborne
Chancellor George Osborne

Figures likely to show the UK economy has enjoyed a third successive quarter of improved growth should give a fresh boost to Chancellor George Osborne today.

Economists predict gross domestic product (GDP) for the three months to the end of September will have increased by 0.8%, after climbing 0.7% in the previous period and 0.4% before that.

Data from the Office for National Statistics look set to provide the second slice of economic cheer this week after separate statistics showing that surging stamp duty revenues helped public borrowing come in £1 billion lower in September than last year.

Growth of 0.8% would be the strongest level recorded for three years and some experts think it could be nearer 1%, amid buoyant survey data from a number of sectors.

However, official figures have been less rosy, showing slowdowns in construction and manufacturing during August.

Meanwhile, retail sales have had a rollercoaster ride, soaring amid the July heatwave, before slumping again in August, then recovering in September.

The release of the first official estimate of GDP figures comes weeks after the International Monetary Fund sharply upgraded its UK growth forecast for 2013 to 1.4%.

Prime Minister David Cameron said the economy “continues to turn a corner”, hailing improvements in employment and other figures showing there are a record number of businesses trading in the UK.

The Bank of England has admitted that the pace of falling unemployment and the “robust recovery” took it by surprise, and is now forecasting 0.7% growth “or a little higher” for the third and fourth quarters.

However, output is still behind its pre-crisis peak in 2008, while wage growth lags behind inflation meaning households are suffering a real terms income squeeze.

Investec’s Philip Shaw forecasts 0.8% growth for the third quarter but said it was “not impossible” that this could be closer to 1%.

He said: “Surveys have been very buoyant indeed. However, the official data over the quarter so far have portrayed a slightly less robust picture.”

Analysts at Scotiabank predict a reading of close to 1% - lying somewhere between “spectacular” survey data suggesting growth of up to 1.5% and official figures pointing to expansion of as little as 0.5%.

Howard Archer, of IHS Global Insight, predicts GDP growth of 0.8%, the strongest since the second quarter of 2010, when a 1% improvement was recorded.

He said domestic demand may have risen by around 1% for the third quarter of 2013 but will have been tempered by disappointing net trade and industrial production figures.

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