Growth figures reveal challenges

 

The challenges faced by the global economy were underlined today by mixed growth figures from both sides of the Atlantic.

The UK economy grew at an upwardly revised rate of 0.6% between July and September, but the estimate for gross domestic product (GDP) growth in the second quarter was slashed to 0% from 0.1%, the Office for National Statistics reported.

Meanwhile, the US economy grew more slowly in the third quarter than previously estimated but economists said the world's largest economy is set to record a strong finish to the year.

Back in Britain, analysts warned the UK was still teetering on the brink of recession, despite the improved third quarter figures, which were revised up from a previous estimate of 0.5%, as indicators point towards a slowdown as the new year approaches.

The overall picture at home was broadly unchanged by the revised figures as the country still faces considerable headwinds in the new year, notably from the eurozone, the UK's biggest trade partner, which is buckling under the pressure of a crippling debt crisis.

Chris Williamson, chief economist at financial services information company Markit, said: "The underlying trend is very clearly one of an economy that is struggling in the face of what seems to be an ever-growing list of headwinds."

Manufacturing, services and trade surveys have been mixed so far in the final quarter of the year, prompting fears that the UK is heading for a double-dip recession.

The tax and spending watchdog, the Office for Budget Responsibility, recently slashed official forecasts for growth following a similar downbeat assessment of the economy from the Bank of England.

The powerhouse services sector, which makes up some 75% of the total economy, grew at 0.7% in the third quarter, up from a previous estimate of 0.6%.

Agriculture grew at 0.5% in the third quarter while construction was ahead 0.3%.

But industrial production growth was revised down once again to 0.2% from 0.4%, which partially offset improvements in the stronger sectors.

The squeeze on household spending was underlined by figures revealing real disposable income growth slowed to 0.3% in the third quarter from 1.3% the previous three months.

Government spending was also revised down to 0.2% from 0.9% - which corresponds more closely with Chancellor George Osborne's programme of deficit-busting spending cuts.

Looking back to the second quarter, growth in the services sector was revised down to 0.1% from 0.2%.

Labour Treasury spokeswoman Rachel Reeves said: "These revised figures show an unchanged picture over the last year. The British economy has been flatlining over the last 12 months, when we need strong growth to get unemployment and the deficit down."

There is some hope that the improved outlook for the US will help steer the global economy to safer ground, although America is also threatened by the potential fallout from a euro meltdown.

The US government now estimates that consumer spending grew at a 1.7% annual rate last summer, instead of 2.3%. The updated estimate reflects data showing less spending on hospitals.

The US third quarter figures were lower than estimated - but were still the best quarterly figures this year, following growth of 1.3% in the second quarter.

However, economists think the economy is growing at an annualised rate of more than 3% in the final three months of this year, which would be the fastest pace since a 3.8% performance in the spring of 2010.

The upturn in the economy comes as President Barack Obama faces a re-election vote in less than a year and a presidential campaign that will focus on the economy.

The President may face voters next year with the highest unemployment of a sitting president seeking election since World War Two.

PA

PROMOTED VIDEO
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning:The British actor says viewers have 'not seen the last' of his character
Sport
The Etihad Stadium, home of Manchester City
premier league

The Independent's live blog of today's Premier League action

News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
voices
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam