October 27th, 2015
Figures released today by the Office of National Statistics (ONS) show that the UK economy grew by 0.5% from July to September, compared to 0.7% in the previous quarter.
While many analysts predicted a growth of 0.6%, the construction and manufacturing sectors’ performance have anchored growth of the UK’s Gross Domestic Product (GDP), according to a leading market research firm.
Construction output fell by 2.2%, the biggest fall in three years, whilst manufacturing output reduced by 0.3%.
“The manufacturing sector is the main cause of the slowdown in growth this quarter, with output falling in all three quarters this year” said Taj Kang, Business Development Director at Contractor Mortgages Made Easy.
“The sector has reduced by 0.9% this year, which is not a huge surprise given the falling demand in many overseas markets, such as China. Ironically the strength of the pound in international terms is further exacerbating this.”
Amidst a worldwide economic deceleration, a poll by news agency Reuters last week showed that economists are now forecasting the first rate increase by the Bank of England in quarter two of 2016 – out from quarter one previously. This does not, however, mean that a further painful recession is about to bite, as Taj explains.
“It sounds an easy get out clause, but part of the fall in construction output can be blamed on a particularly wet August. The British economy took some time to recover from 2008, but we are now at the stage whereby the economy has grown each quarter since early 2013. Annual growth for 2015 as a whole is likely to hit 2.4%, which whilst not spectacular, is a healthy and sustainable increase.”
On the whole, the British economy appears in a positive light at present, with continued growth in economy coupled with historically low unemployment figures. The International Monetary Fund (IMF) recently described economic recovery as the most advanced in the UK and USA, and GDP has now equalled pre-credit crunch levels when assessed per head, according to ONS statistics.
“This all adds up to a fully acceptable year in financial terms for the UK” adds Kang. “With quarter four set to further soften, however, we may find the road into 2016 slightly bumpier than predicted at the beginning of the year.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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