In order for the lower end (2%) of the forecast to be met for 2003, growth would have to rebound to 0.9% in the third quarter of 2003, representing economic growth 0.6% higher than the 0.3% achieved in 2003 Q2, and to 1.1% in 2003 Q4. In terms of quarterly economic growth rates over the past 10 years, such a rebound from 2003 Q2 to Q3 would be unprecedented.
A more likely pattern is 0.5% growth in 2003 Q3, and then for economic growth to average around 0.7% a quarter for the remainder of 2003 and throughout 2004. This would produce economic growth of 1.75% in 2003 and 2.6% in 2004.
Stand by for a reduction in the November 2003 PBR of forecast economic growth for 2003 to 1.75% and to a range 2.5% to 3% for 2004. If chancellor Brown does reduce his spring Budget central forecast for economic growth in his November 2003 PBR, this will be the third year in a row it has happened.
- Maurice Fitzpatrick, head of economics at Numerica.