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Economic growth slows to 0.5%


Slower economic growth eases pressure on the Bank of England over interest rates

Slower economic growth eases pressure on the Bank of England over interest rates

Slower economic growth eases pressure on the Bank of England over interest rates

UK economic growth slowed more than expected in the three months to September, official figures show.

The news will ease pressure on the Bank of England to raise interest rates.

Analysts had forecast that growth would slow slightly from 0.7% in the second quarter to 0.6% in the third.

However, figures from the Office for National Statistics (ONS) put third-quarter growth at just 0.5%.

The powerhouse services sector continued its strong performance, growing 0.7% in the period, but was partially offset by a worrying 2.2% decline in construction output.

That represents the biggest quarterly fall in construction for three years.

Manufacturing continued to struggle as it fell by a more moderate 0.3%, while mining and quarrying increased 2.4%.

Annual growth figures were slightly below expectations at 2.3% - analysts had predicted growth of 2.4%.

While lower than expected, it is nevertheless the 11th consecutive quarter of growth, and Chancellor George Osborne will no doubt point to the fact that the economy is now 12.3% bigger than at the start of the last parliament.

Today's figures are only the first estimate of quarterly growth, and may well be revised up or down in the coming months as the ONS collects more data.

Responding to the figures, Mr Osborne warned that more "tough decisions" would be required to keep the economy on track.

"It is good news that Britain continues to outperform other Western economies," he said. "But there are clear global risks and there is still much more to do to fix our economy.

"In the Autumn Statement we will take more steps to ensure we feel the recovery right across our country, make the long-term investments for the future and, crucially, continue to make the tough decisions required so that Britain lives within its means."

TUC general secretary Frances O'Grady said the latest figures highlighted how unbalanced Britain's economic recovery remained, and called on the Chancellor to offer greater support to the manufacturing sector.

"We need better balanced growth that delivers secure opportunities for working families," she said. "But while the economy is still expanding, the recovery is too weak, and Britain's manufacturing industry remains in decline.

"What's more, the Government's failure to protect our steel industry looks set to mean the loss of even more manufacturing jobs.

"We need a proper industrial strategy to ensure our manufacturing industry keeps up with the rest of the world. And the Chancellor must invest more to boost demand rather than cutting the public services and tax credits which are vital to supporting working families."

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