The second estimate of Q3 GDP growth was -0.3% q/q, a slight upward revision from the preliminary estimate of -0.4%. Lying behind this, a small upward revision to services output more than offset a small downward revision to industrial production. Although there has been a furious debate about the validity of the preliminary estimate, the official picture remains one of sustained weakness in economic activity with GDP dropping in six consecutive quarters, the longest recession on record. We do, however, expect the UK to emerge from recession in Q4.

More interesting than the headline number is the estimated composition of growth in Q3. In recent months the MPC has expressed concern about private domestic demand – household consumption and private investment – which had both fallen at their fastest pace on record during this recession. A stabilisation in private domestic demand was seen as a prerequisite for declaring an end to the economic crisis.

The corollary, however, is that other components of demand were weaker than expected. In particular, exports grew by just 0.5% q/q compared with a 1.3% q/q rise in imports, meaning that net trade subtracted 0.2pp from GDP growth following six consecutive quarters of positive contributions. Government spending was also weak, rising by just 0.2% q/q. This continues a recent pattern of government demand undershooting the Treasury’s Budget forecasts.

Some commentators have worried that growth is being boosted by stockbuilding, which would inevitably prove to be temporary. However, today’s release shows that stockbuilding made a zero contribution to growth in Q3, less than the 0.3pp contribution made in Q2 – although we would caution that stockbuilding is a residual item at this stage in the data production process and is prone to heavy revision.

Given the stabilisation in private domestic demand in Q3, the stage is set for the economy to register positive growth in Q4. The two flies in the ointment are net trade and government spending. The negative net trade contribution in Q3 may prove to be erratic, due in part to strong vehicle imports tied to the government’s car scrappage scheme. The weakness in government consumption relative to the Budget projections is more perplexing, but may reflect an unwillingness on the part of government departments to expand spending given the looming need for fiscal consolidation.

Britain’s biggest retailer has launched a legal action against Universal Cycles amid claims that a member of the supermarket chain’s finance team mistakenly paid £984,000 for six bicycles.

Tesco claims it should have paid £984 for the Muddy Fox Suspension Bikes and is seeking restitution of the overpaid monies, according to a legal action filed at the High Court.

Ferrero, with Western Europe’s largest chocolate confectionery market
share, is proposing taking the faster-growing chewing gum and candy
lines and other assets that make up 40 percent of Cadbury.

– Europe is a potpourri. The Belgian and Portuguese plant all have long term PPAs and GDF Suez would be interested in running them. The ISAB plant in Italy has just come out of the lucrative period of “renewable” pricing and ERG (site owners) would probably buy. The German and Italian wind assets could be of interests to institutional buyers, although GDF Suez may keep them (although I personally would not touch Italian wind with a barge pole – flaky regulatory regime).