UK set to grow despite trouble in the Eurozone
Economists at the International Monetary Fund yesterday maintained their view that the UK economy would grow 3.2 per cent in 2014 and 2.7 per cent in 2015. The IMF added that a Eurozone recession was now more likely, following poor data in Germany.
Manufacturing increased 3.9 per cent on the year but still remained 4.4 per cent below its 2008 peak, according to official figures released yesterday.
Production output, which includes mining as well as manufacturing, was 2.5 per cent higher in August 2014 compared to August 2013.
The UK recovery remains on solid ground but is lacking strong momentum after a bad summer for its largest export market, the Eurozone.
Production failed to grow on the month, said the Office for National Statistics, but it added that month-on-month data was often volatile. Output in the three months to August now remains 9.6 per cent lower than its pre-recession peak in the first three months of 2008.
“The latest industrial production figures may fuel concerns on the monetary policy committee that the Eurozone’s renewed weakness is a major threat to the UK’s recovery. But with little evidence that a slowdown is spreading to the dominant services sector, we expect the overall recovery to maintain its momentum,” Paul Hollingsworth, economist at Capital Economics said.
Further, the National Institute of Economic and Social Research (NIESR), a thinktank, produced its own GDP estimate for the months July to September and placed the UK at 0.7 per cent growth. Although lower than earlier in the year, it is still above the UK’s long run average and translates to 2.8 per cent annual growth.