Economic growth has stumbled once more. Following a strong recovery from recession in the first half of 2010, economic growth has fallen back sharply. Growth in gross domestic product (GDP) growth ran at 0.8% in the third quarter of 2010, This compares with revised GDP growth estimates of 0.4% for Q1 and 1.2% for Q2.
This is according to preliminary estimates of UK economic growth (PDF format, 186.8K) published today (Tuesday 26 October 2010), based on data available "up to 20 October 2010."
Today's GDP figure represents a shallower fall than had been expected, with the consensus among economic forecasters having centred around a forecast of 0.4% GDP growth for the third quarter of 2010.
Construction and business services and finance were the largest contributors to the positive growth this quarter. Growth was, however, widespread.
Some economic commentators maintain that the GDP growth seen in the first half of 2010 could yet prove to be as good as it gets for quite a while, with concerns mounting that the Comprehensive Spending Review will inhibit further growth. Reactions published today include the following:
- CIPD chief economic advisor John Philpott hailed the Q3 2010 GDP data as "greatly encouraging." But he also sounded a note of caution: "[W]ith construction the main driver of growth in the third quarter, and 'government and other services' still a significant driver, there must be a question mark over what will happen when government cutbacks really start to bite in the coming months."
- The EEF's Felicity Burch said: "Forecasts suggest that, after this quarter, the pace of growth will be slower than it was following the 1980s and 1990s recessions. This reflects significant downside risks to the recovery, including the possibility of a global currency war, and domestic consumer caution following public sector cuts. For this reason, the government must deliver on its growth strategy to ensure that manufacturers and the rest of the private sector are able to create jobs, generate wealth and make the investment needed to rebalance our economy."
Preliminary estimates for GDP growth in the fourth quarter of 2010 will be published on Tuesday 25 January 2011.