Economic growth estimate remains at 0.5%

Weaker construction output held back third-quarter growth. Picture: Rui Vieira/PA Wire

The Office for National Statistics (ONS) said its second estimate for gross domestic product in the third quarter was unchanged from earlier estimates.

Preliminary data published last month showed that growth slowed to 0.5 per cent in the third quarter, from 0.7 per cent in the previous three-month period.

Growth in the third quarter was held back by contractions in both construction and manufacturing output, raising concerns that the UK remains overly-reliant on the dominant services sector.

The news will ease pressure on the Bank of England to raise interest rates, which have been held at an all-time low of 0.5 per cent since March 2009.

Governor Mark Carney said to MPs at the Treasury Select Committee this week that rates would stay low “for some time”, and most economists expect the Bank’s monetary policy committee (MPC) to raise borrowing costs next year or in 2017.

Howard Archer, chief UK and European economist at IHS Global Insight, said he expects policymakers to make their first move before the middle of next year.

“This is based on our belief that the UK will see some improvement in growth from its third-quarter soft patch and that consumer price inflation will start rising gradually from late-2015,” Archer said.

“We also expect earnings growth to strengthen further, although this will likely be partly offset by a further pick-up in productivity.”

Official figures show that the UK remained in deflationary territory last month as a result of lower food and alcohol prices. The ONS said last week that the consumer prices index fell by 0.1 per cent in October – the same decline as recorded the previous month.