New figures released by the Office for National Statistics show that the UK economy has recorded the worst ever growth in over 12 years. These numbers have once again shifted the focus back to the Bank of England, which is coming under increasing pressure to cut the interest rates, which have stood steady at 4.75 percent over the past eleven months.
In the second quarter of the current year, ONS figures reveal that the gross domestic product grew by only 0.4 percent as compared to an overall growth of 1.7 percent. This is the slowest recorded growth since the first quarter of 1993, the ONS said. The manufacturing sector is now facing a second recession in three years. Analysts say that this is particularly upsetting since the manufacturing sector has shown substantial growth internationally.
These figures have given further ammunition to the conservative party which has blamed Chancellor Gordon Brown for the prevailing mess, "Gordon Brown began the week by announcing that he was moving the goalposts to make sure he met his own fiscal rules. He ends it with news that economic growth has failed to pick up, while manufacturing output continues to go backwards. His answers are taking us in exactly the wrong direction," George Osborne, the shadow chancellor, lamented.
What these figures have done is that they have only increased the clamor calling for immediate rate cuts in the next month. In fact some analysts are calling for two quarter point cuts as opposed to the one quarter point that is being expected. Geoff Dicks, an economist at the Royal Bank of Scotland was quite emphatic when he said, "An August rate cut is needed to get us back on track." This month even against the backdrop of the London blasts the MPC had voted 5-4 to hold the interest rates at 4.75 percent. Analysts doubt if this will be the case next month.
Posted
on : Sun, 24 Jul 2005 09:05 GMT | Loans News
By : Paula Jenkins
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