United Kingdom GDP

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United Kingdom: Economy decelerates slightly in Q3

November 26, 2014

In the third quarter of 2014, GDP expanded a seasonally-adjusted 0.7% over the previous quarter, according to more detailed figures released by the Office for National Statistics (ONS) on 26 November. The reading was in line with both the preliminary estimate and market expectations; however, it came in below the 0.9% expansion recorded in the second quarter. In annual terms, GDP grew 3.0%, which was slightly down from the 3.2% expansion observed in the second quarter.

According to revised figures, Q3’s expansion came on the back of improving domestic demand, while the contribution from external demand to overall economic growth deteriorated compared to the previous quarter. Private consumption accelerated to a 0.8% rise (Q2: +0.6% qoq) and growth in government spending inched up 1.1% (Q3: 1.0% qoq). Conversely, fixed investment decelerated to a 1.0% expansion in Q3, down from the 1.3% rise seen in the second quarter.

On the external side of the economy, exports of goods and services contracted 0.4% in the second quarter, which matched Q2’s result. Meanwhile, imports rebounded from a 0.3% contraction in Q2 to a 1.4% expansion in Q3, thus expanding at the fastest rate in a year. As a result, the external sector’s net contribution to the overall economy deteriorated to minus 0.5 percentage points from a flat contribution in Q2.

The Bank of England projects that the economy will grow 3.4% in 2014 and 3.0% in 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.0% in 2014, which is down 0.1 percentage points from the previous month’s estimate. The panel sees GDP expanding 2.6% in 2015, which is unchanged from last month’s estimate.

Author:, Senior Economist

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United Kingdom GDP Chart

United Kingdom GDP Q3 2014 0

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Office for National Statistics (ONS) and FocusEconomics Consensus Forecast.

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