British economic growth slowed more than expected in the three months to September after the biggest fall in construction in three years. As Ciara Lee reports is raises the chances that a period of rapid economic growth is coming to an end.
A blow for British Finance Minister George Osborne. Plans to change a tax rule that supplements the income of workers on low pay - blocked by the country's upper chamber. He'd hoped the changes would slash the welfare bill by around 4.4 billion pounds a year. (SOUNDBITE) (English) UK FINANCE MINISTER, GEORGE OSBORNE, SAYING: "What we've got to do is bring our house in order and part of that is living within our means as our country. So we've got to make these difficult decisions on public spending, on welfare and the like. Because ultimately they are the best thing you can do for families because they provide economic security on which higher living standards and jobs depend." And there was more bad news. Growth in the UK slowed more than expected in the three months to September, falling to 0.5 percent, from 0.7 percent in the previous quarter. The main driver for the fall was a 2.2 percent decline in the construction industry. A wetter than usual August didn't help. Seven Investment Management's Justin Urquhart Stewart. (SOUNDBITE) (ENGLISH) HEAD OF CORPORATE DEVELOPMENT, SEVEN INVESTMENT MANAGEMENT, JUSTIN URQUHART STEWART, SAYING: "You need to go back to the actual core of what drives the economy. And that is consumer confidence. The government has been lucky in the past few years because it has had an extra boost for consumer confidence, known as being able to fine the banks with the PPI and so managed to inject 20 billion pounds into the econmy. Directly into peoples wallets and purses which of course they went to spend. Now they have got to find another way of doing that." Manufacturing also fell for the third straight quarter. And focus remains on the British steel crisis which has escalated in recent weeks, with the potential loss of thousands of jobs. One saving grace was the service sector. The largest part of the economy continues to grow steadily, rising 0.7 percent on the quarter.