UK economy grew by 2.6% annually, not 3%, official data showed

The British economy did not grow by 3% between Q3 2013 and Q3 2014, but by only 2.6%, the Office for National Statistics (ONS) informed on Tuesday after publishing revised data.

Soon after the revised figures became public, the pound sterling started to slide.

Income from the country’s foreign investment declined in the third quarter, which was compounded by an increase in money leaving the UK and going to foreign investors. This widened the current account deficit in the quarter to £27 billion from £24.3 billion.

UK GDP (gross domestic product) in volume terms was estimated to have grown by 0.7% in Q3 2014 from Q2 2014. GDP in current prices increased 1.3% from Q2 2014 to Q3 2014, the ONS informed.

Growth in the third quarter was 0.1 of a percentage point lower than in the second quarter.

GDP has expanded during the last seven consecutive quarter-on-quarters, and is currently 2.9 percentage points above the Q1 2008 level (the quarter just before the global financial crisis hit).

UK GDP Q3 2014

Source: “Summary: Q3 2014 Quarterly National Accounts,” Office for National Statistics.

Output in Q3 2014 grew in all four of its main industrial groupings: Agriculture 0.5%, Construction 1.6%, Total Services 0.8%, and Total Production 0.2%.

Total domestic expenditure in the third quarter rose by 1%.

The household saving ration in Q3 2014 was estimated to be 7%.

Wages in the third quarter increased by 1.4%, which was 0.4 of a percentage point below the Q2 2014 figure.

Commenting on the revised GDP estimate, British Chambers of Commerce Chief Economist David Kern said:

“While the quarterly results remain strong, the stark revision in annual growth confirms that the pace of recovery is slowing. The most concerning aspect of these figures is that the current deficit has risen to an unsustainably high level – due to the fall in net investment.”

“Although the economy continues to grow, the recovery is not yet secure and further efforts are needed to boost business investment and to help businesses export to foreign markets.”