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Thursday, 22 November, 2001, 09:43 GMT
UK economic growth trimmed
Factory
Manufacturing weakness is holding back UK growth
The UK economy grew by less than originally thought over the July to September quarter, statisticians have admitted.

The official estimate for growth in UK economic output, or GDP, for the period has been trimmed from 0.6% to 0.5%.

On an annual basis, the growth rate was revised down by 0.1% to 2.1%, further distancing it from a Treasury target range of 2.25-2.75%.

But the figures suggest that the UK is still growing more quickly than most other industrialised nations.

UK outstrips US, Germany, Japan

Official data released on Thursday showed that Germany's economy, the world's third largest, shrank by 0.1% during the July to September period.

According to a report earlier this week from the Organisation for Economic Cooperation and Development, the world's two biggest economies are also in the doldrums.

The US, the world's biggest economy, is set to expand by just 0.7% next year, while world number two Japan is forecast to shrink by 1%, the OECD said.

Analysts had feared that UK growth for the July to September period, which includes the aftermath of the terrorist attacks in the US, would be revised far lower.

Investors gave a cautious welcome to the July to September growth figures, pushing the FTSE 100 index of leading shares slightly higher late on Thursday morning.

Economic imbalance

However, the latest statistics also show that the UK still faces a serious imbalance between the manufacturing and service sectors.

Manufacturing output between July and September fell by 0.8% compared with the previous three months, while the service sector grew by 0.6%.

Export-dependent manufacturers have been hit hard by slowing growth in the US, while the European single currency's persistent weakness against the pound has priced them out of markets in the eurozone.

Although manufacturing accounts for just 20% of the UK's GDP, large-scale job losses in the sector could cause a more widespread slowdown by denting consumer confidence.

Service sector growth has already slowed sharply since the beginning of the year.

See also:

22 Nov 01 | Business
Rich countries on the brink
22 Nov 01 | Business
No UK recovery until 2003, says CBI
22 Nov 01 | Business
The chancellor's choices
14 Nov 01 | Business
UK economy to recover in 2003
26 Oct 01 | Business
UK growth surprisingly strong
18 Oct 01 | Business
Sales growth slows at UK stores
24 Sep 01 | Business
UK growth 'to fall sharply'
26 Oct 01 | Business
Analysis: How fit is the UK economy?
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