UK economic growth downgraded in second blow for George Osborne

Disappointment: The GDP figures raised questions over George Osborne's upbeat economic forecasts

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Jonathan Prynn, Business Editor @JonPrynn|Russell Lynch

23 December 2015

Official estimates of economic growth have been downgraded in a second successive dose of bad news for George Osborne.

Government statisticians said that GDP rose by only 0.4% in the third quarter of the year, compared with their previous figure of 0.5%.

Annual growth in the 12 months to September was knocked down from 2.3% to 2.1% by the Office for National Statistics.

The revision will add to fears that Britain’s robust economic recovery is running out of steam and that the Chancellor’s upbeat forecast in last month’s Autumn Statement will prove too optimistic.

It comes that day after disappointing public finance figures showed that Government borrowing increased to £14.2 billion in November, £1.3 billion more than last year.

The ONS update also reveals a much slower pace of investment in items such as plant, machinery, equipment and buildings.

So-called gross fixed capital formation grew by 0.6% over the quarter, much slower than the 1.3% previously estimated.

But the pace of consumer spending - accounting for more than half of the economy - ticked up from 0.8% to 0.9%.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The recovery clearly has exacerbated the economy’s long-standing weaknesses... the tremendous boost from declining saving to consumer spending since the recession can not be repeated.”

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UK economic growth downgraded in second blow for George Osborne

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