LONDON, Nov 26 - Economic growth in Britain in the third quarter of the year was stronger than initially thought at 0.7 percent on the quarter, the best for a year, official data showed on Wednesday. The Office for National Statistics revised up its initial estimates by a tenth of a percentage point, leaving the annual rate at 2.0 percent, the same as the previous quarter. The ONS said the upward revision was due to higher estimates for distribution services, construction output, and VAT receipts. The increases were partly offset by downward revisions to manufacturing and mining and quarrying, related to North Sea oil and gas maintenance shutdowns. The figures are good news for Chancellor of the Exchequer Gordon Brown as he approaches his pre-budget report on December 10. It now looks as if his growth forecast of 2.0-2.5 percent for 2003, which was derided back in April, may now be achieved.
But while the figures look impressive, and bring growth back in line with its long-run trend after several quarters of sluggishness, they pale into insignificance compared to the quarterly growth rate of 2.0 percent in the United States. Growth in Britain remains well above that in the euro zone, however, where countries like Germany and Italy are only just emerging from recession. The Bank of England earlier this month raised interest rates for the first time in nearly four years as it expects the economy will continue to recover and so put upward pressure on inflation. But the Bank will be concerned that growth in Britain remains unbalanced with the services sector doing well but manufacturing remaining in the doldrums.
The ONS said steps had been taken to improve the reliability of its construction estimate but said further improvements would be made in the medium term as a result of a review of the data it was carrying out with the Department of Trade and Industry, which supplies the raw data.//