The British economy showed its weakest year-on-year performance in 12 years during the second quarter, official data showed Friday, piling pressure on finance chief Gordon Brown's 2005 growth targets. The manufacturing sector meanwhile fell into a recession, National Statistics added. Analysts said the negative data pointed towards an interest rate cut next month.
Gross domestic product (GDP) growth on a 12-month comparison stood at 1.7% during the second quarter -- the weakest 12-month performance since the first quarter of 1993. Chancellor of the Exchequer Brown's GDP growth target for 2005 was between 3.0-3.5%.The economy grew at 0.4% in the three months to June from the previous quarter, according to the initial estimates.
The figures also showed the manufacturing sector fell into recession after output contracted 0.7% in the second quarter -- on top of a 0.9% decline in the previous three months. Manufacturing accounts for 20% of the Britain's GDP. Two quarterly declines in a row in manufacturing output means that the sector was now technically in recession. The last time that happened in manufacturing was the third quarter of 2003.
One key problems facing industry was the rapid rise of oil prices, which has pushed up costs at a time when companies are having to hold prices to remain competitive against cheaper imports.
Copyright Agence France-Presse, 2005