Economic Calendar

Tuesday, December 22, 2009

U.K.'s Contraction Eased In The Third Quarter

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Daily Forex Fundamentals | Written by ecPulse.com | Dec 22 09 10:13 GMT |

The British economy after falling deeply in recession in the first and second quarters this year, it managed to ease the pace of contraction in the third quarter after the introduction of various fiscal and monetary measures that gave an impetus to the economy, especially in the third quarter.

GDP for the third quarter final reading was released today showing a decline in contraction to 0.2%, below expectations of -0.1%, from 0.3%. Signs of improvement appeared from the second quarter when the economy shrank 0.6% compared with 2.4% contraction in the first quarter and the progress continued in the third and fourth quarters as seen by the data released recently.

A leap in construction and fixed investment made the contraction to ease in the third quarter. Analysts are expecting the economy to leave recession in the fourth quarter and expand more in 2010.

The Bank of England anticipates the economy Britain will return to growth in the last quarter. The economy is expected to expand 2.2% next year and 4.1% in 2011, according to policy makers’ projections announced in November.

In December, the BoE left the benchmark interest rate unchanged at 0.5% and the APF program at 200 billion pounds. The Confederation of British Industry raised its growth forecasts for 2010 to 1.2% on 2010 and 2.5% in 2011 and mentioned that Bank of England may stop its APF program in February.

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