December 20, 2019 / 9:37 AM / a month ago

UK economy's growth in third-quarter revised up, smallest current account gap since 2012

LONDON (Reuters) - Britain’s economy grew a little faster in the third quarter than first estimated and the country’s current account deficit shrank to its smallest since 2012, a small boost ahead of what looks set to be a sluggish end to the year ahead of Brexit.

FILE PHOTO: The Canary Wharf financial district is seen from the construction site of 22 Bishopsgate in London, Britain June 25, 2019. Picture taken June 25, 2019. REUTERS/Hannah McKay

The world’s fifth-biggest economy grew 0.4% in the third quarter of the year, better than a previous estimate of 0.3% and boosted by upward revisions to services and construction output, figures from the Office for National Statistics (ONS) showed.

While the data was better than any analyst polled by Reuters predicted, incoming Bank of England governor Andrew Bailey - appointed earlier on Friday - will probably be more concerned by other recent gauges of the economy that show it has slowed to a crawl in late 2019.

“The underlying picture is still that there is very little momentum in the economy,” said Andrew Wishart, UK economist at Capital Economics.

The ONS said a surge in goods exports helped Britain’s balance of payments deficit narrow to 15.860 billion pounds ($20.68 billion)in the third quarter from 24.152 billion pounds in the second quarter, roughly in line with expectations.

As a percentage of economic output, the deficit fell to 2.8%, its smallest since early 2012.

The BoE’s departing governor, Mark Carney, described Britain as dependent “on the kindness of strangers” before the 2016 Brexit referendum. On Monday the BoE said the current account deficit still posed economic risks.

British trade flows have been volatile in 2019 and the boost from trade is unlikely to be sustained, especially with global demand weakened by a U.S.-China trade war.

Prime Minister Boris Johnson swept to a landslide victory last week, removing some of Britain’s political uncertainty.

Nonetheless, he has promised to strike a trade deal with the European Union by the end of 2020 and will not extend the Brexit transition - a deadline that leaves open the prospect of another cliff-edge for businesses and investors.

The economy grew by 1.1% in the year to the end of September, up from an earlier estimate of 1.0%. A Reuters poll of economists suggested the economy will grow 1.3% this year.

The BoE said on Thursday it was waiting for more signals about how much last week’s election was easing the uncertainty that has weighed on the economy.

Editing by Jon Boyle

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