The U.K. Economy - Growing Slow yet Steady ...

The expansion of the U.K. economy is endangered due to a slowdown in the emerging markets. As per the reports, U.K. economic growth contracted because manufacturing shrank for a third straight quarter and construction declined the most since 2012. In the words of George Osborne, the Chancellor of the Exchequer, the U.K. is clearly facing global risks. If statistics are to be true, U.K. economic growth is 0.5% in the third quarter, which is sharply lower than what the economists had forecast. When asked about the percentage of economic growth that was expected in the third quarter, Jamie Murray, the Chief Economist of Bloomberg LP, justified the statistics by stating that the expected percentage was 0.6%, so there is only a slight deviation

As for the Office for National Statistics, construction shrank 2.2 percent and manufacturing contracted 0.3 percent while the overall production growth cooled from 0.7 percent to 0.3 percent in the quarter. Mark Carney, the Governor of Bank of England, said if rate increases are not needed, then officials won’t act. Kit Juckes, the global strategist at Societe Generale, also had his say in an interview on Bloomberg Television. He said that he will now be looking at the wage growth numbers and that the U.K. economy is growing just lethargically steadily.

After the aforementioned statistics were published in a report, the pound fell and traded at $1.5329 on October 27, 2015. This amount is down 0.2% in comparison to the amount that was noted on Monday. The report is based on 44% of the available information, and it is the first of the three estimates from the ONS; therefore, it will most likely be revised. The U.S. will report their GDP growth for the third quarter on October 29, 2015, which is a day after the latest Federal Reserve policy decision. For the U.S., the economists predict a slowdown to a yearly rate of 1.5% from 3.9%. On the same basis, the U.K. expanded 2% in the July-September quarter, which is down from 2.6%.

Now, the BOE is busy determining the answer to the question – Will the U.K. economy slow down further or will it gathers momentum again? Everyone shared their viewpoint on the situation. As per Samuel Tombs, who is an economist at Pantheon Macroeconomics in London, the economy is virtually wholly dependent on services, and the latest quarter is the start of a proclaimed slow down. On the other side of the debate, James Knightley offered a more positive evaluation of the situation, saying the U.K. economy growth story is not that bad and the numbers will surely improve this quarter. As per Carney, growth should be continuous and at a faster quarterly rate in order to eliminate spare capacity. He also accepted that rate increases are a possibility not a certainty.

As compared to the previous year, U.K. GDP expanded 2.3% in the third quarter, compared with 2.4% in the second quarter. Output is now 6.4% above its prerecession peak. In the three months, growth in services, this is the biggest share of the economy, escalated from 0.6% to 0.7%. The BOE will be publishing new growth and inflation forecasts on November 5, 2015, along with its policy decision. Let’s wait, and watch for the upcoming updates on the growth of the U.K. economy.