By Jaimie Kaffash
26 October 2010
The economy grew faster than expected in the third quarter of this year but was down on the previous quarter, statistics released today show.
An Office for National Statistics report showed that the economy grew at 0.8% between July and September – double the rate predicted by analysts. But this was in comparison with growth of 1.2% in the second quarter of this year. Sales figures were also not as strong as expected, falling 0.2% over the previous quarter. The property sector fared worse, experiencing a 0.4% drop.
Roy Barrell, head of forecasting at the National Institute of Economic and Social Research, said the growth is to be welcomed. He added that the figures weakened the case for the Bank of England to undertake further ‘quantitative easing’ – increasing the money supply by buying up government bonds.
Howard Archer, an economist at HIS Global Insight, warned: ‘While the data suggests that the economy had more momentum than thought in the third quarter, it does not fundamentally change our view that growth will be markedly slower going forward as economic activity is pressurised by major fiscal tightening increasingly kicking in, persistently tight credit conditions, slower global growth and significant constraints on consumers.
‘Indeed, we still expect growth to slow to 0.4% quarter-on-quarter in the fourth quarter and then to edge lower still in the first half of next year.’
Trades Union Congress general secretary Brendan Barber warned this could be a ‘jobless recovery’. He added: ‘This estimate may be better than expected but with unemployment looking increasingly stubborn, the economy will need to perform stronger than this to generate jobs for the millions still out of work as a result of the recession.’
