UK quarterly national accounts have undergone a rebasing to 2002 prices, together with a comprehensive revision to past data. The revised data paint a significantly different picture of the UK economy from that on which we based our last forecast. It now seems that the economy decelerated in the second half of 2004 and into the first quarter of 2005 (see chart 1), whereas the previous data indicated a more robust outcome for the second half of 2004, with greater momentum carrying over into 2005. The preliminary estimate of GDP suggests that the belowtrend growth continued into the second quarter of this year. The previous data indicated that the UK was operating at full capacity, while it would now seem that we are moving into a period where there is some spare capacity in the economy.