UK economic growth revised down

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Sterling notesImage source, PA

The UK economy has grown more slowly in the past year than previously thought, official figures indicate.

Revised figures show gross domestic product (GDP) in the third quarter of this year was 2.6% higher than in the same period in 2013, down from an earlier estimate of 3%.

Also, the UK's current account deficit widened in the third quarter to £27bn.

That put the difference between the country's export and import of goods and services at a record 6% of GDP.

David Kern, chief economist at the British Chambers of Commerce, said: "The stark revision in annual growth confirms that the pace of recovery is slowing."

"The most concerning aspect of these figures is that the current deficit has risen to an unsustainably high level."

The downward revision in the annual GDP growth rate was due to lower government and business investment than first thought, and higher imports.

Despite that, the Office for National Statistics (ONS) confirmed that the UK's GDP still grew by 0.7% in the third quarter of the year.

However, the revisions for previous quarters mean the economy is now only 2.9% higher than the previous pre-recession peak.

Earlier figures published by the Office for National Statistics (ONS) had suggested that the economy was in fact 3.4% up on that peak.

Media caption,

ONS Chief Economist Joe Grice observes that UK GDP has risen but per head is still below recession levels

'Mixed' signs

Other statistics published by the ONS show that in the third quarter of the year, household spending (after the effect of inflation was stripped out) grew by 0.9% or £2.5bn.

The main factor was a 2.9% rise in spending on transport compared with the second quarter.

Howard Archer, at IHS Global Insight, said: "The latest economic data and surveys are somewhat mixed amid signs that increased global economic uncertainty and weakness in the eurozone is having some dampening impact on business confidence and investment.

"This may well be reinforced over the coming months by heightened political uncertainty ahead of the May 2015 general election.

"However, retail sales have been very strong, which bodes well for consumer spending in the fourth quarter."

Martin Beck, at the EY Item Club, suggested that the economy could grow faster next year than this.

"The plunge in oil prices promises to provide the economy with renewed momentum, by improving household purchasing power and boosting global growth," he said.

"The likelihood that disinflationary pressures will keep interest rates unchanged through 2015 should provide another spur to growth."

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