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UK Economy
UK recovery weaker than earlier forecast
From the Financial Times of Tue, 23 Dec 2014 10:39:36 GMT
The evening sun sets on the horizon beyond 20 Fenchurch Street, also known as the 'Walkie-Talkie,' left, the Leadenhall building, also known as the 'Cheesegrater,' center left, Tower 42, center right, 30 St Mary Axe also known as 'the Gherkin,' and the Heron Tower, right, in the City of London, U.K., on Thursday, July 3, 2014. The pound advanced to a 21-month high versus the euro, strengthening for a fifth day, as speculation the Bank of England will tighten policy this year contrasted with the European Central Bank's outlook. Photographer: Simon Dawson/Bloomberg©Bloomberg

The UK’s economic recovery has been notably weaker than previously thought, with the national statistics body revising down the country’s growth figures for five consecutive quarters, while the current account deficit deteriorated in the third quarter.

The Office for National Statistics on Tuesday confirmed that growth in the third quarter was a healthy 0.7 per cent, but revised down all of the quarterly growth figures since the second quarter of last year.

The breakdown of the statistics also showed that the recovery was a little less balanced that previously thought with growth in household spending revised up, and overall investment down.

Samuel Tombs, senior UK economist at consultancy Capital Economics, said the latest figures “leave the UK’s economic recovery looking more fragile than it seemed before.”

There was also bad news on the current account in the third quarter, with the UK’s position versus the rest of the world deteriorating to a deficit of £27bn, equal to 6 per cent of economic output, wider than the 5.5 per cent in the second quarter.

The worsening of the deficit was mainly due to falling receipts from foreign direct investment, and payments to foreign investors rising.

The ONS also released for the first time a set of indicators designed to give a “more rounded and comprehensive basis for assessing changes in economic wellbeing”.

Each quarter, it will release a set of six additional metrics alongside the national accounts, including GDP per head, net disposable income per head and household incomes.

The additional data confirms that while the economy is recovering, households are still feeling the pinch and the UK remains a poorer country than before the recession on many metrics.

GDP per head remains 1.8 per cent below the pre-crisis peak and net national disposable income, which represents the income for UK residents, remains 5.6 per cent below that period.

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