Little comfort to be found in third quarter growth figures

CHANCELLOR George Osborne is unlikely to get much of a boost out of the UK’s third quarter growth figures this week although the economy is expected to have remained in positive territory.

Osborne’s plans to reduce the public sector deficit are based on estimates made last year of growth close to 2 per cent a year, but economists now think that unlikely. They say the pace of recovery will have accelerated only slightly in the third quarter of 2011 from its anaemic 0.1 per cent rise in the previous three months.

The Office for National Statistics is expected to reveal on Tuesday that gross domestic product grew by about 0.3 per cent between July and September. Third quarter figures are expected to be boosted as the economy plays catch-up from a series of one-off hits in the previous quarter, when the extra bank holiday for the Royal Wedding and disruption to the supply chain after the Japanese tsunami were blamed for the sluggish performance.

Victoria Cadman, an economist at Investec, expects growth of 0.4 per cent.

But she warned that the “special factors” aiding the third quarter upturn, coupled with the headwinds of slower euro area growth, mean the UK recovery will be slow into next year.

The dominant service sector is likely to power what growth there is, with recent surveys revealing that the manufacturing sector is back in the doldrums.