13 January 2004, 16:52  NIESR sees UK Q4 growth of of 0.7%

LONDON, Jan 13 - Britain's economy grew an estimated 0.7 percent in the final quarter of last year from the previous one, the National Institute of Economic and Social Research said on Tuesday. This follows a downwardly-revised 0.7 percent expansion in the three months to November and is considerably below many other economists' estimates of fourth quarter growth. NIESR always issues its GDP estimate after the Office for National Statistics releases industrial production data. Those out today were weak, showing an unexpected, 1.0 percent fall on the month in November. But NIESR insisted interest rates needed to go up.
"Growth remains buoyant and our view is that there is a broad case for an early rise in interest rates. However the change in the inflation measure last month creates a significant presentational obstacle," it said. In December Chancellor of the Exchequer Gordon Brown changed the Bank of England's inflation target to 2.0 percent under the harmonised index of consumer prices measure from 2.5 percent under the old RPIX measure. Under the new measure, inflation is at just 1.3 percent. The Bank's Monetary Policy Committee is widely expected to add to November's rate hike next month in response to a rapid pick up in the economy. But the drop in manufacturing output and rise in the pound against the dollar are leading some economists to question whether the MPC will act so soon.//

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