Sky News business presenter Emma Crosby

Another snap shot of the state of the economy today. The UK's economy for the first three months of this year grew at 0.4%. That's the slowest growth rate for three years and confirms many economists' predictions that the country's engine is starting to splutter.

No surprise to see that the financial and business service sector , which now accounts for 28 per cent of the economy, put in the weakest quarterly performance since 2003. And that manufacturing is showing signs of a revival, benefiting from a falling Pound against the Euro.

So, how bad is it? On paper this number is pretty much in line with the Treasury's estimations for full year GDP growth of 1.75%-2.25%. Team that with inflation steady at 2.5% and the latest retail sales figures showing shoppers still hitting the streets but not spending as much.

Yet comments from economists aren't too optimistic. Capital Economics says " Looking ahead , the recent downturn in forward looking indicators and the major imbalances in the economy suggest that growth could slow considerably further in the coming quarters".

The Centre for Economic Business Research says these numbers will be of concern to the Chancellor and they expect to see "UK growth continue to slow and register little growth over the next two quarters."

And the manufacturer’s body, the EEF, is quite bullish about the manufacturing sector but goes on to say " Given how fast the economic picture is evolving the story may have already moved on and it would be naive to think the continuing credit crunch will not spill over into the real economy at some point."

What about the views from business leaders. WPP boss Sir Martin Sorrell, who presides over the world's second biggest advertising firm, says the credit crunch isn't as bad as people think and business in the States is doing well.

So, who do you believe? the economists, the politicians or the business men at the coal face? Over the next few months we'll find out who's right.

Comments

[Greg Heath, Leyland 28 Apr 2008 10:33:11]

In the real economy there is a spluttering going on but it is far too early to tell if it will pick up again or stall the engine altogether.

I personally think we need a new economic forecasting model because the current one is woefully outdated in the information age.

I also should add I don't believe any politician as they all lie however our current Nu-labour bunch have taken it to a new all time low on lies and spin. After all hands up who believes 'real' inflation is under 5-6%?

[mike, newport,gwent 27 Apr 2008 23:36:15]

Inflation is being driven by the weakness of the dollar in the global markets; with the insecurity surrounding the American economy commodities are now being traded at record levels, you only have to look at you grocery bill to see how much prices have risen recently. Perhaps it might be the right time for the financial regulators to look closely at the futures markets and call a halt to this madness.

[Khalid 27 Apr 2008 20:06:27]

Whilst the economical liquid gold casues many a financial splurry, then dependant on whose mind you are tuned into, fear will either be far of the mark or you never know may well be founded.
Having listened to many a financial guru on [Sky] channel 501 on the digital platform, which also provides with a multi camera option if you press the red button, then not only are such market concerns like a needle in the haystack, but in many a case a concern surrounding many a financial myth.
So, like mos things in life, especially the engine, unless it is fine tuned, perfomance will in many a case endforce the words [Son-i-que]. But, dont worry, this toon is fine for the next few months!

[pete brighton 25 Apr 2008 16:04:20]

splutter! Oh my goodness Emma, what planet are you on? This country is in the wosrt mess its been in since medieval times. You have to get a grip on this. These people that you get your quotes from are massaging your ego and lying through thier teeth. We should not believe politicains or business men, go and ask someone who works in a real job what its like out there at the moment. Im telliing you that mass emmigration is about to hit this country as people leave in droves for a better quality of life elsewhere. Your reporting is way off the cycle, you are miles behind the curve. All i can say is, be prepared to help people, becasue a time is coming when you will be reporting food shortages, mass unemployment, civil unrest and great homelessness and turmoil. Dont say I didnt warn you.

[Bill, Middle England 25 Apr 2008 14:56:05]

Emma,

Economies and markets work in cycles. Corrections are inevitable as inefficiencies and demand bubbles are ironed out.

However much they try, Govts cannot buck the markets. Their influence is limited to how well/badly the host economy adapts to market corrections or market developments.

What we are seeing is a global re-adjustment to more normal conditions after an unprecedented spell of global low inflation and high demand, substantially fuelled by cheap debt.

As someone in business outside the retail sector, I see little difference yet in business activity.

The biggest threat, in my view, is the likely term required for global economies to reduce Govt, Corporate and Personal debt.

That is likely to result in a sluggish recovery and no quick fixes. Most Govts, especially ours, have boxed themeselves into a corner.

The quickest fix, of course, would be a dose of good old inflation!

[Michael Cornwall 25 Apr 2008 14:37:18]

I would like to believe Sir Martin Sorrell, as he is a positive guy.Positive thinking can get an individual, a company, and indeed a country out of a jam.
The wealth of this country is largely made by these go ahead people , we need their positivity.

[Clive.Copeland.Cumbria 25 Apr 2008 14:25:43]

If a Politician told me it was raining I would go to the window and check.