UK slowdown worse than forecast as output slumps
Grainne Gilmore
Industrial production plunged at the fastest pace in nearly six years in October, heightening expectations that the recession is gathering pace as revisions to September's data indicate that the economy shrank by more than initially thought between June and September.
The measure of industrial production, which counts for just under a fifth of Britain's GDP, fell by 1.7 per cent in October, the biggest slump since January 2003, official figures show.
Output by manufacturers dropped by 1.4 per cent, the eighth consecutive monthly fall and the longest decline since 1980.
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UK GDP during the third quarter was initially believed to have fallen by 0.5 per cent, but the actual decline, taking into account today's data, is now expected to show growth contracted by 0.6 per cent.
October's figures also indicate that the slowdown in the final three months of the year is set to be more severe. Some economists have said that a 1 per cent decline in GDP is possible, with more falls expected next year.
Britain is widely expected to officially fall into recession after the final three months of the year, when the country will have endured two consecutive quarters of negative growth — the technical definition of a recession.
Paul Dales, of Capital Economics, said: "The recession is clearly deepening and the downside risks to our forecast that the GDP will fall by 1.5 per cent next year are growing."
Today's figures will heap more pressure on the Bank of England to make more aggressive interest rate cuts to try and curb the economic downturn, with some analysts predicting that rates could fall as low as 0 per cent next year.
There was more gloomy news as separate figures showed that the UK trade deficit had widened to £7.8 billion, from £7.4 billion in September, indicating that the falling pound is not boosting manufacturers' exports.
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with gordon brown borrowing billions and sending the pound evan lower against other currencies,it goes to show browns plans are not working ,this gov will try to make out that a lower pound will be good for british exports,do not believe it,countries are cutting back on imports,and soundbites by gov
thomas, wallasey, uk
I find it interesting that I hear economists/ jounalists extalling the virtues of another interest rate cut when the fact is that this is uneffective as it bears no relation to the LIBOR which remain much higher. Surely LIBOR rates need to be changed before we will see any positive effect.
Ian Hughes, London, UK
Don't worry we are in the best position to cope with this recession and hard working families will be looked after by this caring government.
Don't make me laugh!