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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (751)	4/23/2005 4:04:21 AM
From: maceng2	Read Replies (1) \| Respond to of 1417

UK's economic growth in slowdown news.bbc.co.uk The rate of UK economic growth slowed during the first three months of the year, official statistics show. Gross domestic product (GDP) grew at a rate of 0.6%, slower than the 0.7% seen in the last three months of 2004. Economists say the slowdown in both consumer spending and industry output makes a rise in interest rates next month less likely. The Bank of England has left the UK benchmark interest rate unchanged at 4.75% for eight months. Rate rise speculation The preliminary estimate of the GDP figures, published by the Office for National Statistics (ONS), brings the UK's annual growth rate to 2.8%, the lowest estimate since the last quarter of 2003. Earlier this week, ONS statistics showed that the annual rate of UK inflation increased to a greater-than-expected 1.9% in March, its highest level for nearly seven years. That news had sparked speculation of a rise in interest rates next month, but analysts are no longer so sure. "We did have a rise in inflation this week, but a fall in retail sales suggested those price rises won't stick," said ABN Amro economist James Carrick. "The [Bank of England's monetary policy committee] can afford to wait a bit longer to see if they will have to raise interest rates further." Standard Chartered economist Gavin Redknap said the uncertain consumer outlook makes a near-term rate rise unlikely. "Following [Thursday's] weak retail sales report, we've pushed back our call for the next and final 25 basis point rate hike to August," he said. Mixed outlook Manufacturing and consumer spending may have faltered but the UK's service sector picked up much of the slack, and some analysts were optimistic about the outlook for business in the UK. Both manufacturing output and spending slowed down The "report shows that the economy can continue to grow at a solid clip despite a weaker consumer," insisted Mr Redknap. It "doesn't give expenditure breakdowns, we'd expect that upcoming reports will show that the business sector is taking up the reins for growth." Others were more gloomy. "We believe that the UK economy will remain on a slowing trend with lead indicators... suggesting little prospect of an imminent rebound in the industrial sector," said ING Financial Markets economist James Knightley. "At the same time, slowing consumer activity suggests that service sector growth will also continue to moderate. "We look for full-year 2005 growth to slow to 2.5% with 2006 struggling to hit 2.0%. Both of these are well below Treasury forecasts of 3.25% and 2.75% respectively, which implies taxes are going to have to rise whoever wins the election."