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Economy yields more good news for Brown

There has been more good news for Gordon Brown with figures showing the economy is doing better than previously thought.

Revised data released on Tuesday by the Office for National Statistics revealed the economy grew twice as fast in the spring than earlier estimates had indicated.

Estimates of growth in gross domestic product were revised up from 0.3 per cent to 0.6 per cent because figures from the Department of Trade and Industry had been wrong.

The changes mean growth for the second quarter of this year is up 0.4 per cent on the first quarter.

It will be seen as good news for the chancellor, who has been attacked for his growth predictions by City analysts and his political opponents.

The ONS explained its decision to revise its statistics saying the DTI had issued new estimates for the construction sector showing growth of 4.4 per cent rather than its original figure of 0.8 per cent.

The improvement led to economists upgrading their forecast for GDP across the year.

Added to this was the revelation that manufacturing has seen an increase of 0.5 per cent. The sector has been in the doldrums and workers on Monday demonstrated at Labour's party conference to demand more action by the government.

Some now believe it is possible for Brown to meet his lowest GDP forecast of two per cent.

"The second quarter has been transformed from one of lacklustre growth to somewhere close to trend," said Investec chief economist Philip Shaw.

The down side for the chancellor is that the service sector growth weakened slightly, dropping from 0.5 per cent to 0.2 in the second quarter.

And there was an increase in government borrowing over same period.

The current budget deficit is now at £12.7 billion, up from £9.4 billion for second quarter of 2002. Net debt as a proportion of GDP reached 31.8 per cent.

Published: Tue, 30 Sep 2003 01:00:00 GMT+01
Author: Chris Smith