A modest 0.2% increase in Britain's gross domestic product during the final quarter of 2001 surprised economists and analysts, according to the latest report from the government’s National Statistics Office.
The better than expected performance – also up 1.9% year on year – was largely fuelled by robust growth in the business and financial services sectors
Despite being the lowest increase recorded since Q1 1999, the 0.2% rise bettered market expectations of flat to 0.1% growth, and implies that the UK economy remains in a relatively healthy state compared with the overall global picture. Retail sales stay robust, while the rise and rise of the housing market continues. Paradoxically, the rate of inflation – among the lowest in Europe – remains below target.
The latest growth estimate for 2001 is 2.4%, which although below the previous year’s 3%, is markedly better than the US, the Eurozone and Japan.
All was not sweetness and light however, the report suggesting that the bullish GDP data masks an economy out of kilter. Although no figures are yet available, the indications suggest a continuing sharp decline within the nation’s ailing manufacturing sector.
The manufacturing malaise has triggered a chorus of demands for the independent Bank of England to switch its strategy from interest rate cuts to measures that will reduce the currently high value of the pound, thereby boosting the price-competitive edge of British exports and increasing the cost of imports.
News source: Wall Street Journal