The UK Economic Growth Slowdown is Feared

Britain might be feeling the effects of the global slowdown headed by the Chinese economy as its construction and manufacturing sectors have contracted in the second quarter.

The signs of economic slowdown of growth are apparent in the UK economy. The construction sector has seen a fall by 2.2% in the third quarter, while the manufacturing sector has shrank by about 0.3% last quarter. However, business and service growth sectors have shown signs of increment by about 0.7%, which is less than the fall in the construction and manufacturing sectors combined.

Britain is falling prey to global slowdown?

Many economic experts who are seeing the slowdown of the construction sector and manufacturing sector in the country, a trend not seen since 2012, are worried that this might indicate the effects of the global slowdown affecting Britain’s economy. The slowdown that has been seen in the second quarter of 2015 has been from 0.7 percent to 0.5 percent, which is a sharper figure than what economists had estimated. The shrinking of demand in the construction sector over two percent and the contraction of the manufacturing sector by 0.3 percent led to the production growth falling from 0.3 percent to 0.7 percent.2

Effects of the slowdown

The report that came in might signal that the slowdown of the emerging markets has impacted the expansion and growth plans of the British economy. Experts are stating that there are clear risks in the goal economy, which are making their impact on the UK economy. The global strategist Kit Juckes of Societe Generale stated that the peak rate of growth has passed and what one can look forward to is a steady growth rate which would be sluggish. The impact was seen in the share markets as well. The pound’s value fell the day the economic data was published and it then, since trades at the rate $1.5329 from Monday. Foe the US the GDP growth reports for the third quarter is awaited as well. That will come after the policy decision of the Federal Reserve is announced. Economics however, fear a slowdown of the annualized rate. UK has expanded by two percent is down from the previous quarter figures of 2.6 percent.

What remains to be seen?

Most experts are now looking towards BOE and the kind of policies it might announce. The economy could slow down more or pick up the momentum again, depending on the prediction and the strategies that the head bank takes. Economists point out that the UK economy has been dependent on the services sector entirely in the last quarter, which can lead to a slowdown this quarter.

Some experts are giving a more upbeat review and forecast like ING whose officials feel that the domestic growth rate is robust and will continue to show improvement in the third quarter. Even China has been seeing a spurt of sales and profits among companies like Alibaba and Apple, whose full details can be found in the article Alibaba Sales Shrug off Fears of a Slowdown of the Chinese Economy”.

 


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