UK economic growth continues, albeit at a slightly weaker pace

According to the preliminary estimate, economic growth fell back to 0.5% q-o-q in Q3 2015, after a rise of 0.7% in Q2. Growth was registered in three of the four main sectors. Output in services increased by 0.7% q-o-q and contributed 0.6% to GDP. Construction output, conversely, was a large drag on economic growth. The 2.2% q-o-q drop reduced GDP growth by 0.14%. The sector was likely harmed by rainy weather in August. 

Overall industrial production increased by 0.3% q-o-q, however, manufacturing fell by 0.3% q-o-q. The CBI Industrial Trends Survey shows a strong drop in headline orders for October and points to a continuation of weak manufacturing output in the fourth quarter. This weakness partly relates to the relatively strong pound compared to the euro. 

The UK economy faces some additional headwinds going forward as the upcoming Brexit referendum might harm business sentiment and private investments. At the 17-18 December meeting of the European Heads of State, the British government will likely try to secure a deal with the EU that will reform its membership, in order to enhance pro-European sentiment among the British population. 

The British government will likely try to re-negotiate issues covering EU competitiveness, UK sovereignty, migration and protection against the increasing influence of the Member States in the Eurozone.