Reply #35: U.K. Economic Growth Slowed to 12-Year Low in 2nd Qtr

[54anickel]

http://www.bloomberg.com/apps/news?pid=10000087&sid=aB79xra6NLyM&refer=top_world_news

Sept. 28 (Bloomberg) -- The U.K. economy expanded at the slowest annual pace in more than 12 years in the second quarter, reinforcing expectations Chancellor of the Exchequer Gordon Brown will have to scale back plans to increase spending.

Europe's second-largest economy grew 1.5 percent from a year earlier instead of the 1.8 percent estimated on Aug. 26, the Office for National Statistics said in London today. It was the slowest annual pace since the first quarter of 1993 and none of the 34 economists surveyed by Bloomberg expected the revision. The economy grew an unrevised 0.5 percent from the first quarter.

The International Monetary Fund said Sept. 21 Brown may have to raise taxes or curb his spending plans after slashing its U.K. growth forecast for this year to 1.9 percent from 2.6 percent, well below the 3-3.5 percent growth predicted by the Treasury in March. Prime Minister Tony Blair yesterday put improvements to health and education at the center of the agenda for his third and final term in office, and Brown is counting on economic growth to pay for them.

``Brown's luck is running out at a crucial time,'' said Douglas McWilliams, chief executive of the Centre for Economics and Business Research Ltd, McWilliams. ``Whether growth comes in at 3 percent or 2 percent means relatively little to the general public, but whether their taxes go up or down does and he is going to have to raise taxes unless he cuts spending.''

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