"Rising activity and slowing inflation leaves the U.K. in a Goldilocks moment for now, although we remain concerned that much of the upswing remains cyclical and overly dependent on consumer spending"
- Tom Vosa, an economist at NAB Capital
The U.K. economy has posted a 0.8% growth in the third quarter, unchanged after the final revision, while the economic expansion between Q3 2012 and the same period this year stood at the upwardly revised 1.9%, or 0.4% higher than the previous estimate. The key services sector contributed to the 0.8% growth with the 0.7%, while the second largest boost came from the construction sector, which has logged a 2.6% growth in Q3.
Also Friday data showed the other side of the Britain's economy, with current account deficit soaring to 20.7 billion pounds, from 6.2 billion in the second quarter. Moreover, public finances weakened, as net borrowing ballooned to 16.5 billion, compared with 15.6 billion in the prior period. Additionally, the disposable income ticked up for a second consecutive quarter, while saving ratio fell, highlighting the dependency of recovery on consumer spending.
At a first glance, the economy is performing rather well, however, the BoE has become more pessimistic about the outlook, after publishing its first detailed analysis of previously-made errors. The central bank admitted that MPC forecasts have been poor since the beginning of the financial crisis, and saying they have overpredicted growth and inflation.
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