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UK economy expands

October 24, 2014

Britain's gross domestic product (GDP) has expanded in the third quarter, albeit at a slightly slower pace than in the previous three months. But increased prosperity might backfire, budget experts warned.

Großbritannien - London - Canary Wharf
Image: picture alliance / Photoshot

The UK's economy grew by 0.7 percent in the third quarter, the Office for National Statistics (ONS) reported Friday in an initial estimate.

To most analysts, it mattered little that the figure marked a slight slowdown from 0.9-percent growth recorded in the second quarter as they'd already penciled in a drop because of concerns over an uncertain global outlook.

Despite the slower pace, the British economy looked more dynamic than the eurozone as a whole which logged sluggish growth and struggles with deflationary pressures.

"Today's strong growth figures show that the UK continues to lead the pack in an increasingly uncertain global economy," Britain's Finance Minister George Osborne commented.

The ONS noted the slight slowdown reflected a weaker service sector, which accounts for more than three quarters of the nation's GDP.

Brussels bashing

Rather than worrying about the slowdown, domestic economists and policy makers were more concerned about the content of an article published in the Financial Times and citing a leaked EU document. It claimed London would have to pay an additional 2.1 billion euros ($2.7 billion) to the bloc's budget because of its higher-than-anticipated growth - in line with the EU's cross-member financial adjustment rules.

France, with its ailing economy, would have to contribute 1 billion euros less, the document stated.

"The European Commission is penalizing Britain for taking tough decisions and for having the most successful economy in the EU, while actually rewarding France for being an economic basket case," complained the UK leader of the European conservatives and Reformists Group in the EU Parliament, Syed Kamall.

Reports suggest that British Prime Minister David Cameron has called for an emergency meeting of EU finance ministers to discuss the issue.

hg/ng (AP, Reuters, dpa, AFP)