NIESR says UK economy slowed in the third quarter

Jessica Morris
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The UK's dominant services sector grew at its weakest pace in more than two years (Source: Getty)

The National Institute of Economic and Social Research (NIESR) has found economic growth remained stuck at 0.5 per cent in the three months to September, having grown by the same amount between June and August.

This also represents a slowdown from a growth rate of 0.7 per cent in the second quarter of this year, according to official figures.

"This slight softening in the third quarter is expected to be temporary. It is consistent with our latest forecast for the year as a whole," NIESR said.

Read more: Four things to watch for in the BoE's minutes

This is in line with a string of lacklustre data which suggested economic growth cooled off in the third quarter. The UK's dominant services sector grew at its weakest pace in more than two years, and today's better-than-expected industrial production figure will not be enough to prop it up.

Slower growth is likely to feature in the minutes from the monthly meeting of the Bank of England's monetary policy committee tomorrow. Rate-setters, who weigh the strength of the UK economy with low inflation and weak global demand, are expected to vote 8-1 in favour of holding interest rates at a record low 0.5 per cent.

NIESR added: "Economic growth remains reasonable and, although we do not expect the BoE’s MPC to vote to raise rates at its October meeting, we continue to expect the first rise in bank rate in the first half of 2016."

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