Peter Ranscombe: Expected fall in UK growth set to dominate markets

Confirmation of a sharp pull-back in Britain's economic recovery is expected tomorrow when the Office for National Statistics (ONS) publishes its eagerly-anticipated third-quarter growth figures.

The release of the preliminary estimate is a crucial event in the economic calendar, coming amid mounting fears over double dip recession in the face of government spending cuts.

Third-quarter figures are also likely to be key in shaping the Bank of England's plans for quantitative easing (QE) measures to pump more money into the economy.

It is widely expected the UK economy continued to grow in the three months to September, marking the fourth consecutive quarter of recovery since the recession. But economists are all agreed that growth will be nowhere near the levels seen in the second quarter, when gross domestic product rose by 1.2 per cent - its fastest pace for nine years.

The second quarter was seen as being unusual, with the construction sector enjoying record-breaking growth thanks to a bounce back after the heavy snow at the start of the year.

Manufacturers were also benefiting from customers replacing stockpiles used up in the recession. But this growth was never seen as being sustainable and the third-quarter GDP estimate is set to make this clear. Experts are pencilling in GDP quarter-on-quarter growth of 0.4 per cent.

British Airways is expected to make a welcome return to half-year profits when it reports interims on Friday.

BA's figures come amid a marked global recovery in air travel, with better-than-expected results from US rivals Delta and American Airlines taking the market by surprise.

In a sharp reversal of last year's record 292 million half-year loss, the market expects BA to report pre-tax profits of 73m in the first six months.

Last year's plunge marked the first time BA has recorded a first-half loss - normally a buoyant period for the airline as it includes the holiday season.

This year, first-half trading has begun bouncing back to more normal levels, despite strikes. The group's recent passenger figures have pleasantly surprised the market thanks to the return of the business traveller.

BA flew 4.3 per cent more passengers in September, following robust figures in August as it shrugged off its cabin crew dispute.

High street banking giant Santander updates the market on Thursday as the sector's third-quarter earnings season gets into swing.The Spanish group - an increasing force in UK banking after snapping up a raft of players including Abbey and Alliance & Leicester - is eyeing further growth after a robust half year.

Santander said earlier this year it was on track to open one million accounts for the second year in a row, and posted a 10 per cent rise in pre-tax profits to 875m for the first six months of the year.

News this month also ensured its rapid expansion plans remained on track as the European Commission approved its takeover of the retail and commercial banking assets of part-nationalised Royal Bank of Scotland.

The move will instantly boost its UK branch base by around 300, while also including around 40 business banking centres. Santander already has 25 million customers and 1,300 branches.

With the UK government's public spending review laid out on the table, outsourcing firm Mouchel will be looking for a boost from potential opportunities rising out of the cuts.

The company - which develops roads, schools, water and energy supplies for local councils and government agencies - expects to take advantage of the austerity measures, as more services will be outsourced.

But the firm has already warned its profits are likely to be lower than City expectations when it posts full-year results on Thursday, as the uncertainty running up to George Osborne's spending review weakened trade.

The company said profits before exceptional items will be around 30.5m, lower than City expectations of 35m.