UK growth may slow
By David Milliken |
January 12, 2011, Wednesday
|
Print Edition
Print Edition
BRITISH economic growth likely slowed sharply around the turn of the year and retail sales fell in the crucial Christmas trading month of December, according to two surveys published yesterday.
The surveys make grim reading in what British Prime Minister David Cameron says will be a difficult year. Value added tax has increased to 20 percent from 17.5 percent, while government spending cuts will start to bite this year.
Rising prices also complicate the outlook. Inflation is running more than one percentage point above the Bank of England's 2 percent target and some investors see a rise in interest rates as early as May.
The British Chambers of Commerce - which represents firms employing around one in six UK workers - reported strong manufacturing growth but a weak performance from the much larger services sector in the last three months of 2010 in its quarterly economic survey.
BCC chief economist David Kern said it would translate into growth of 0.4-0.5 percent for the fourth quarter of 2010, down from 0.7 percent in the third quarter.
The downward trend is likely to continue in the first two quarters of 2011, resulting in growth of around 0.2 percent in each quarter as businesses deal with reduced domestic demand and the VAT rise.
British retail sales fell in December for the first time since April last year, dragged down by heavy snow and consumers' fears about the economic outlook, a survey by the British Retail Consortium showed.
"We have seen resilient food sales - we all have to eat - but non-food has had a very tough time," according to BRC Director General Stephen Robertson.
The surveys make grim reading in what British Prime Minister David Cameron says will be a difficult year. Value added tax has increased to 20 percent from 17.5 percent, while government spending cuts will start to bite this year.
Rising prices also complicate the outlook. Inflation is running more than one percentage point above the Bank of England's 2 percent target and some investors see a rise in interest rates as early as May.
The British Chambers of Commerce - which represents firms employing around one in six UK workers - reported strong manufacturing growth but a weak performance from the much larger services sector in the last three months of 2010 in its quarterly economic survey.
BCC chief economist David Kern said it would translate into growth of 0.4-0.5 percent for the fourth quarter of 2010, down from 0.7 percent in the third quarter.
The downward trend is likely to continue in the first two quarters of 2011, resulting in growth of around 0.2 percent in each quarter as businesses deal with reduced domestic demand and the VAT rise.
British retail sales fell in December for the first time since April last year, dragged down by heavy snow and consumers' fears about the economic outlook, a survey by the British Retail Consortium showed.
"We have seen resilient food sales - we all have to eat - but non-food has had a very tough time," according to BRC Director General Stephen Robertson.
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