UK Economic growth in 2005 worst since 1992

Economic growth in the UK last year slumped to its lowest rate since 1992, official figures showed.

Gross Domestic Product (GDP) was just 1.8% higher in 2005 than the previous year, according to preliminary figures from the Office for National Statistics (ONS).

The growth rate was marginally better than the 1.7% forecast by many City economists but well below the 3% to 3.5% Chancellor Gordon Brown predicted in his budget early last year.

The Chancellor was forced to scale back his forecast to 1.75% in the pre-budget report to Parliament in December.

The 1.8% rate of annual growth came after a hike of 0.6% in the last three months of 2005, up from 0.4% in the third quarter.

But the fourth quarter rally was not enough to stop annual GDP growth falling to its lowest level in more than a decade, and almost half the 3.2% rate reached in 2004. In 1992 growth was just 0.3%.

The fourth quarter was boosted by a 1.3% rise in mining and quarrying and a 0.9% increase in services. The service sector represents about 73% of the UK economy and rose 2.6% over 2005 as a whole.

The ONS said a 0.8% decline in manufacturing in the fourth quarter saw industrial production fall by 0.6% at the end of the year. Industrial production accounts for 20% of the economy and fell 1.5% over the whole of 2005, compared with a 0.7% rise in 2004.

The worst hit manufacturers in the fourth quarter were in the transport equipment industries and the paper, printing and publishing industries.

ED: Trouble is that the money taps are gushing in the public sector and the money producing private sector well is drying up. If I were Tony and Gordon I would be preparing my early exit plan.