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The British economy is growing at a slow pace amid weak manufacturing industries

The British economy is growing at a slow pace amid weak manufacturing industries

According to official data, Britain’s economy grew less than previously estimated in the third quarter, lagging behind other developed countries. And data from the British National Statistics Office on Wednesday, December 22. Production grew by 1.1 per cent in the three months to September, lower than the initial estimate of 1.3 per cent compared to the previous quarter.

“Our revised figures show that UK GDP has recovered somewhat slowly in the third quarter, with the energy sector shrinking in September,” said Darren Morgan, director of economic statistics at the National Bureau of Statistics.

The decline in output compared to the pre-epidemic fourth quarter of 2019 has been reversed to 1.5 per cent, which is lower than the 2.1 per cent expected in 2020 due to the upward adjustment to growth.

Fall of manufacturing industries

However, overall, the British economy has been hit harder than other advanced economies. Over the same period, growth in the eurozone has almost returned to its pre-epidemic level, while production in the US and China has effectively outpaced it, while contributing to lower output in manufacturing industries, including downward adjustment production in electricity and gas. , Utilities and Mining The output of these sectors declined by 0.1 per cent in the third quarter, down from the previous estimate of 0.8 per cent expansion.

Shrinking business investment

According to official estimates, business investment shrank by 2.5 percent in the third quarter, pushing it to almost 12 percent below pre-epidemic levels, the worst record for any major advanced economy.

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Tony Russell, chief development officer at Proteus, a consulting firm, told the Financial Times that as business investment has been growing sharply since 2016, not only is the UK corporate environment lagging behind, it is also undermining their future growth potential.

The UK trading performance has been revised to indicate that net trade is likely to continue to decline in 2022 as British manufacturers are “slowly disconnected from global supply chains” due to Brexit.

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Recovers consumer costs

Home consumption was the main driver of growth in the third quarter, with levels registering 2.7 percent, driven by strong spending in restaurants.

Thomas Buck, an economist at RSMUK, said that “consumer spending patterns are beginning to return to normal” as people buy less. At the same time, costs for services have increased, which will help reduce the constant pressure on supply chains.

Low family savings rate

The household savings rate – the average percentage of disposable income – fell to 8.6 percent in the third quarter from 10.7 percent in the previous three months.

Home savings have also plummeted since the outbreak, and Martin Beck, a consultant at the Ernst Young ID Club consulting firm, noted that consumption was on the rise before the emergence of the new strain “Omigron” from “Govit”. .

However, Book said, “(Omicron) now dominates the economic outlook and GDP is expected to fall by 1 percent in January compared to November.

He added that “although there are no other restrictions, production in the restaurant, hotel and entertainment sectors (Omicron) will stagnate in December and January.”

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