British Economy Grows Above Estimates

LONDON - Britain's economy in the third quarter of 2010 grew a surprising 0.8 percent, double the above estimates. Recent data released by the government yesterday show that the recovery in the Land of Queen Elizabeth sudha started walking.

The announcement was only a week ago after the Coalition Government of the UK's largest budget cut spending in a decade that had alarmed economists because it could trigger a second wave of recession.



"Gross Domestic Product (GDP) England in the third quarter of 2010 continued positive results in the previous quarter which grew 1.2 percent" said the British Office for National Statistics (ONS) in its official statement, quoted by AFP, yesterday.

ONS added that British economic growth in the period of July-September 2010 seconded the performance of the service sector, construction and production. In a 12-month scale, the UK economy grew 2.8 percent over the same period in 2009 and is the strongest growth since 2007.

"Economic growth in Britain showed surprising improvement in the recent quarter," said Global Insight economist Howard Archer HIS in London yesterday.

However, other analysts said that growth in the quarter still will henceforth be predicted to weaken and is forecast to grow only 0.4 percent.

In different reports, indicators of British economy is also experiencing improvements in the services sector. This is indicated by the indices of service products which rose 2.7 percent in August. This figure is higher than the 0.6 percent analysts forecast.

The improvement in the UK economy is predicted to reduce the pressure on the Bank of England (Bank of England / BOE), which is still running the quantitative easing program (EA) to improve the liquidity of the business sector. During the program, the BOE has poured funds approximately 200 billion pounds (USD318 billion) to buy high-value assets owned by the company.

In another part, the international rating agency Standard & Poor's (S & P) yesterday announced a UK credit rating in the AAA level with rising foreign debt outlook from "negative" to "stable". Improved outlook for the UK from the S & P gained after the UK Government to do the program budget savings thereby increasing investor confidence.

"In our view, the decision by the British Government and the coalition will make savings in reducing the risk of government when they mengimplemantasikan fiscal consolidation policy in June 2010," said the head of S & P analyst Trevor Cullinan yesterday.

As is known, the British Finance Minister George Osborne last week to explain details of these budget savings to cut 20 percent of government budgets over the next four years. The budget cuts will impact on the reduction of incentives on public welfare programs.

UK savings programs undertaken to reduce the budget deficit last year reached 11 percent of GDP. England target the savings would reduce the deficit to only three to four percent in 2014.