Britain’s economic recovery lost steam in the third quarter with growth of 0.7%, according to the National Institute of Economic and Social Research.
NIESR’s estimate reflects a slight slowdown compared with the second quarter, when gross domestic product increased by 0.9%. If correct, it would mean the UK economy is 3.1% bigger than it was in the third quarter of 2013.
Simon Kirby, principal research fellow at the thinktank, said 0.7% was still a reasonable quarterly increase. “Growth rates move around from quarter to quarter. We shouldn’t be surprised to see growth moderate somewhat from the very robust rate in the preceding quarter. It’s a story of continuing economic recovery.”
Kirby said manufacturing was holding back the UK economy, after the latest data from the Office for National Statistic (ONS) showed the sector barely grew in August. Manufacturing output increased by just 0.1% over the month, while the broader measure of industrial production was flat.
Kirby said there were a number of risks to the UK recovery. “The eurozone is the biggest risk because it is the UK’s main trading partner. It is intertwined with our economic fortune, certainly in the short term.”
The UK economy is now 3.5% larger than it was at its previous peak in January 2008, according to NIESR’s estimates. However, it said there was still a “reasonable amount” of spare capacity in the UK economy to be used up before the Bank of England starts raising interest rates.
via The Guardian