UK economic growth revised up to 0.6 pct in Q3

AP News
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Posted: Dec 22, 2011 6:00 AM
UK economic growth revised up to 0.6 pct in Q3

Britain's economy grew by a slightly better than anticipated 0.6 percent in the third quarter, after unexpectedly stalling in the previous three month period, official figures showed Thursday.

The 0.1 percent upward revision to the third quarter growth was offset by an equivalent reduction to the previous quarter to show no growth at all.

The Office for National Statistics said the upward revision was largely due to agriculture, construction and services performing better than estimated. Those sectors outweighed the impact of a faltering industrial sector.

The third quarter rise was the highest since the third quarter of 2010, when the British economy also grew by 0.6 percent but analysts aren't getting too carried away.

Britain's economy remains threatened by the debt crisis in Europe, rising unemployment and weak domestic growth, and the Bank of England has forecast little or no growth over the next few quarters.

"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," said Chris Williamson, chief economist at financial services information company Markit.

The Conservative-led government has staked its reputation on a strategy of cutting costs and jobs in the public sector while trying to boost private sector growth. Britain's unemployment rate is now 8.3 percent, up 0.4 percent on the quarter and at its highest level since 1996.

Influential credit ratings agency Moody's warned this week that the U.K.'s cherished triple A credit rating is at risk from both a weak domestic economy and the financial crisis in the eurozone. It warned that the country's deficit "has eroded its ability to absorb further macroeconomic or fiscal shocks without rating implications."