LONDON, Oct 21: Growth of the British economy slowed during the third quarter, official data showed on Friday raising pressure on finance minister Gordon Brown to lower his optimistic fiscal targets, analysts said.
The economy grew by 0.4 per cent during the third quarter of 2005 compared with 0.5 per cent for the previous three-month period, according to initial estimates from the National Statistics office.
Gross domestic product (GDP) growth on a 12-month comparison stood at 1.6 per cent during the third quarter, taking the annual rate up from a 12-year low of 1.5 per cent in the previous quarter.
Analysts noted that the data reduced also the prospect of there being a cut in British interest rates next month.
Sterling rose to $1.7783 after the release, compared with 1.7765 beforehand, while the euro slipped to 0.6670 pounds from 0.6777.
Chancellor of the Exchequer Brown’s official 2005 British economic growth target stands at 3.0-3.5 per cent, but he was widely expected to update the forecast in his pre-Budget report next month.
Brown acknowledged recently that the rate of growth would not be as strong as forecast due to high oil prices and a sluggish global economy.
In reality, Gordon Brown’s forecasts will have to be slashed to around 1.75 per cent, Investec economist Philip Shaw said.
The economy has been growing at a sub-par pace for five quarters now and we cannot see that situation changing over the next year or so.
The third-quarter GDP numbers were close to analysts’ consensus forecasts of a 0.3-per cent quarter-on-quarter growth rate and a 1.6-per cent annual growth rate.
The British GDP data was published as the Bundesbank said that economic growth in Germany picked up during the third quarter owing to strong exports.
The bank added however that the rise was unlikely to lift the gloom hanging over Europe’s biggest economy.—AFP
