UK GDP Growth Lowered; Current Account Deficit Widens

Arthi Gupta
22 Dec, 2010
New York City

The UK indexes gained and third quarter GDP growth was lowered and current account deficit widened. The Bank of England policy makers were split at the last meeting. Irish trade surplus widened in October.

[R]4:30 PM London – The UK indexes gained and third quarter GDP growth was lowered and current account deficit widened. The Bank of England policy makers were split at the last meeting. Irish trade surplus widened in October.[/R]

The Bank of England policy makers left key interest rate unchanged and maintained the size of quantitative easing at £200 billion by a split vote in December, the minutes of the meeting showed on Wednesday. The meeting was held on December 8 and 9.

Seven members of the Monetary Policy Committee including Governor Mervyn King voted to hold the key rate and to maintain the size of asset purchase program at £200 billion.

Adam Posen preferred to maintain bank rate at 0.5% and increase the size of the asset purchase program by £50 billion to a total of £250 billion. Andrew Sentance sought a quarter point hike in the key rate and to maintain the size of the bond purchase program at £200 billion.

In London, FTSE 100 Index gained 27.97 or 0.47% to 5,979.77 and the pound edged lower to close at $1.5399.

UK Q3 GDP Falls, Current Account Deficit Widens

The UK economy expanded less than previously estimated as growth in the manufacturing, construction and services sectors was downwardly revised.

The Office for National Statistics on Wednesday lowered its economic growth estimate for the third quarter to 0.7% from the 0.8% growth estimated earlier. The GDP growths for the second and first quarters were also lowered 0.1 percentage points each to 1.1% and 0.3% respectively.

The UK current account recorded a deficit of £9.6 billion in the third quarter compared to revised deficit of £5.2 billion (originally published as a deficit of £7.4 billion) in the previous estimate.

Third quarter consumer spending in the UK rose 0.3% compared to second quarter. The most positive growths were in recreation, culture, food and non alcoholic drink.

UK Home Prices Likely Fall

British home prices are likely to fall by around 2% next year, the Royal Institution of Chartered Surveyors said on Wednesday.

The RICS forecasts the number of housing transactions in 2011 at around 900,000.

Irish Trade Surplus Widens

Ireland''s trade surplus expanded in October to 4.15 billion euros from 3.87 billion euros in the previous month, the Central Statistics Office said. Exports declined a seasonally adjusted 2% from the previous month, while imports dropped 11%.

Gainers & Losers

Eckoh Plc surged 7.54% to 7.13 pence after the developer of speech recognition solutions for customer contact centers said it got a new three-year contract from Whitbread Plc. The contract is for the provision of a fully PCI DSS compliant speech enabled reservations and cancellations service to Whitbread''s hotel brand, Premier Inn, Eckoh noted.

Infrastructure India PLC gained 0.83% to 61.00 pence after the closed-ended investment company stated profit and pre-tax profit for the six month ended September 30 was £705,000 compared to a loss and pre-tax loss of £925,000 in the year-ago period.

MCB Finance Group plc plunged 7.00% to 23.25 pence after the consumer finance company said it expects earnings-before-tax profit for the 12 months to December 3, in line with market expectations, including a profitable second-half.

Newmark Security plc slumped 21.21% to 1.30 pence after the investment holding company stated revenue for the six months ended October 31 slipped 13% to £6.08 million from £6.99 million last year. Profit during the period dropped 53.3% to £0.35 million or 0.08 pence per share from £0.75 million or 0.17 pence per share last year.