http://www.bloomberg.com/news/2010-10-25/u-k-growth-probably-weakened-last-quarter-as-boe-keeps-fingers-crossed-.htmlBritain’s economic growth probably slowed in the three months through September to a third of the pace of the previous quarter, keeping pressure on policy makers to consider adding stimulus. Gross domestic product rose 0.4 percent in the period, compared with a 1.2 percent increase in the second quarter, according to the median forecast in a Bloomberg News survey of 35 economists. The Office for National Statistics will publish the data at 9:30 a.m. today in London. The release is the first for the quarter from a Group of Seven nation and comes less than a week after finance minister George Osborne revealed the scope of spending cuts that will lead to the loss of half a million jobs. Bank of England Deputy Governor Paul Tucker said yesterday that the economy faces “reasonably strong” headwinds and an “uneven” recovery. “The economic outlook is looking very subdued,” Simon Hayes, an economist at Barclays Capital in London and a former Bank of England official, said in an interview. He predicts “we will muddle through without having to extend quantitative easing and I think a lot of Monetary Policy Committee members will have their fingers crossed and hope that’s the case.” Hayes, who forecasts the data will show growth of 0.4 percent, cited surveys of purchasing managers as evidence of slowing expansion. Manufacturing growth weakened to a 10-month low in September, according to a survey by Markit Economics and the Chartered Institute of Purchasing & Supply. While service industries growth unexpectedly accelerated, there were “wide variations” in sentiment, the groups said. Budget ‘Clarity’ The pound rose 0.4 percent against the dollar today and traded at $1.5786 as of 7:34 a.m. in London. It has risen around 10 percent since falling to a 14-month low in May. Marks & Spencer Group Plc Chairman Stuart Rose said yesterday that Osborne’s announcement on Oct. 20 to pare back spending by an average of 19 percent across government departments has offered “clarity” to consumers. A double-dip recession is unlikely, he said in an interview in Berlin. Former policy maker Charles Goodhart said Oct. 18 that today’s GDP report will matter “quite a lot” as the Bank of England decides whether to add stimulus. Minutes of the Oct. 7 decision, published last week, showed policy makers are starting to lean toward further emergency bond purchases. “Some of the members felt the likelihood that further monetary stimulus would become necessary in order to meet the inflation target in the medium term had increased in recent months,” the minutes said. Adam Posen voted for more bond purchases to aid the economy, while Andrew Sentance favored an interest-rate increase to tame consumer prices. Inflation stayed at 3.1 percent in September, exceeding the government’s 3 percent limit for a seventh month. The bank left its benchmark interest rate on hold at a record low of 0.5 percent this month and kept its asset-purchase program at 200 billion pounds ($314 billion). Policy makers will consider whether to buy more bonds at their decision on Nov. 4. To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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