British economic growth ground to a halt in the first three months of 1999, government data showed yesterday, rekindling the debate over whether Britain was heading for a recession and needed a cut in interest rates.
The British economy is expanding at the slowest annual rate since 1992, when it was just starting to pull out of a recession, the Office for National Statistics said, as it revised downwards growth estimates released last month.
In the first three months of 1999, gross domestic product did not grow at all compared with its performance in the last quarter of 1998, and inched ahead just 0.6 per cent in comparison with the first quarter of 1998.
In April, the office said in its first estimation that GDP grew by 0.1 per cent quarter-on-quarter and 0.7 per cent year-on-year.
The statistical mark-downs, though slight, surprised economists who had expected a slender upward revision in line with recent upbeat comments by the Bank of England.
The bank said recently the possibility of recession had diminished from a one-in-four chance to a one-in-10 outside shot. The revelation that the monetary authorities were upbeat and preparing for a "gentle takeoff" rather than a "soft landing" left less scope for interest rate cuts which manufacturers and exporters want.
The bank's monetary policy committee nonetheless came close to nudging rates down from their current level of 5.25 per cent at its recent meeting, and economists said that yesterday's data would support a rate cut.
"This does help the case for the [bank] going for one further easing" of rates, said an economist. "It would support the case for a final 25 basis point repo rate reduction."
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