London [UK], October 17: Britain's economy grew only marginally in August and over the June-August period, with analysts warning that weak business and consumer confidence continues to weigh on the outlook ahead of November's Budget.
The country's monthly real gross domestic product (GDP) increased 0.1 percent in August, following a revised fall of 0.1 percent in July and a growth of 0.4 percent in June, the Office for National Statistics (ONS) said on Thursday.
Britain's real GDP expanded 0.3 percent in the June-August period, compared with the March-May period. This follows a growth of 0.2 percent in the three months to July and a growth of 0.3 percent in the second quarter of this year, according to the ONS.
Analysts said the mild growth is not enough to lift Britain's sluggish economy, citing dim projections both from businesses and consumers.
Acknowledging Thursday's data showed a slight pickup in the economy, Stuart Morrison, research manager at the British Chambers of Commerce (BCC), said the marginal growth will not settle the long-standing concerns of firms.
"For the last twelve months, small and medium-sized enterprises have told us the same story: rising costs, weak investment, and little sense of relief on the horizon," Morrison said.
The BCC's latest survey shows "business confidence and investment levels continue to suffer," Morrison noted. "A fifth of firms are expecting lower turnover over the next year, and a quarter have scaled back investment plans."
Commenting on the performance of specific economic sectors, Anna Leach, chief economist at the Institute of Directors, said that although the economy held up well over the summer, the underlying picture is more mixed.
Manufacturing output "remains flat and volatile, reflecting the pressure of a challenging global environment, alongside domestically-driven cost pressures," she said.
"The underlying trends in construction are particularly worrying," Leach said, noting that the sector is already contending with acute skills shortages, rising costs, and long delays, while added uncertainty over potential housing tax changes in the forthcoming Budget is further weighing on housing demand.
As to the consumer market, Leach said, "consumer services picked up slightly in August, helped by retail, yet the three-month trend remains negative as households see real income gains eroded by persistent inflation and weak confidence ahead of the Budget."
Helen Dickinson, chief executive of the British Retail Consortium, also underlined the sluggish outlook for consumption. She said rising inflation and a potentially taxing Budget are weighing on the minds of many households planning their Christmas spending, while retailers also face difficult decisions about investment and hiring.
Ahead of the Budget, the British economy stands at a pivotal juncture, with growth decelerating, unemployment rising, and inflation above target, according to a report released on Thursday by the Institute for Fiscal Studies (IFS).
Morrison stressed that "growth will only improve if business confidence improves, and that won't happen if more cost pressures are piled on firms." He called for no new taxes on business in what he described as the "make-or-break" Budget.
"The future of many large anchor stores and thousands of jobs remains in jeopardy while the Treasury keeps the risk of a new business rates surtax on the table," said Dickinson.
The IFS took a pessimistic view on the economic outlook, forecasting growth to slow further in the second half of this year, with the economy growing at half the rate it did in the first half.
"Consumption and business investment will likely be muted, as uncertainty remains elevated, monetary policy has remained in restrictive territory, and households continue to build savings," the institute said, citing surveys suggesting businesses remain cautious and are dissuaded from investing by squeezed margins and high financing costs.
Source: Xinhua News Agency