Economy data provides little seasonal cheer as autumn rebound falls short of expectations


Pre-Christmas cheer from the beleaguered UK economy was in short supply today after more disappointing data on growth and the public finances.

The releases from the Office for National Statistics (ONS) showed that the autumn rebound in the economy was not quite as strong as forecast at 0.9 per cent, while it emerged the Government borrowed more than expected in November.

There are fears the UK will slump back into recession for the third time early next year, although a better-than-expected performance from the services sector offered a glimmer of hope for Chancellor George Osborne today.

ONS figures showed that the services sector had grown 0.1 per cent between September and October.

But Scott Corfe, senior economist at the Centre for Economics and Business Research, said the economic outlook remained highly fragile and a triple-dip recession could not be ruled out.

He said: "We expect economic growth of less than 1 per cent next year, which means that the Chancellor's deficit reduction plans could come off the rails."

Economists had predicted a fall in public sector net borrowing, but excluding financial interventions such as bank bailouts, it was £17.5 billion in November, up £1.2 billion on the same month last year.

The worse-than-expected public finance picture will put further pressure on Britain's gold-plated AAA status, with all of the three main ratings agencies now with the country on negative outlook.

The further signs of the weakness of the UK economy will fuel speculation that the Bank of England will decide to carry out more asset purchases - also known as printing money - next year.

It held off from boosting its £375 billion quantitative easing (QE) this month, after inflation rose to 2.7% in October and November.

In the Chancellor's Autumn Statement earlier this month, the Office for Budget Responsibility (OBR) said it expected borrowing to be £108 billion in 2012/13, lower than its £119.9 billion March estimate.

Public finances will be swelled by assets from the QE programme, which will be transferred to the Treasury, and the Government is also expecting the auction of bandwidth for 4G mobile broadband services to provide a boost.

A Treasury spokeswoman said: "Today's various data underline what the Chancellor said to Parliament at the Autumn Statement: that it's taking time, but the British economy is healing. The deficit is down by a quarter since 2010, and more than a million private sector jobs have been created."

The Office for Budget Responsibility said it remained "highly uncertain" the Government would meet its public sector borrowing target.

It said there would need to be higher tax receipts and weaker spending growth to meet the forecast, but that tax receipts were highly dependent on the performance of the economy over the remainder of the year.


Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own