Britain’s economy continued to expand in the third quarter, official figures yesterday confirmed, thanks to a rebound in household spending and modest levels of business investment.
Releasing its second estimate for the period, the Office for National Statistics (ONS) confirmed that gross domestic product (GDP) grew by 0.4 per cent between July and September. That compares with quarter-on-quarter growth of 0.3 per cent for both the first and second quarters.
The update comes after fiscal watchdog the Office for Budget Responsibility served up gloomier forecasts for GDP growth and the UK public finances over the coming years in Wednesday’s Budget.
Consumer spending proved resilient over the third quarter, bouncing back to 0.6 per cent growth from 0.2 per cent in the second quarter despite the persistent squeeze on household finances from higher inflation and muted wage growth.
Business investment also grew in the third quarter, but could only tease out a 0.2 per cent rise to £45.8 billion compared with the preceding three months. The growth figure for Britain’s powerhouse services sector – more than two-thirds of the economy – eased to a four-year low of 1.4 per cent during the three months to September, compared to last year.
Howard Archer, chief economic advisor to the EY Item Club think-tank, said: “The UK economy was confirmed picking up a little speed in the third quarter but it was still far from racing ahead.
“Despite the modest pick-up in growth and stronger consumer spending, the outlook for the UK economy currently remains challenging. Consumer purchasing power is still being squeezed appreciably while business concerns and uncertainties over Brexit and the economy are hampering investment.
“Hopefully, net trade can help growth as exports benefit from ongoing healthy global activity and a very competitive pound.”
Meanwhile, retail sales rebounded in the year to November but stores once again expect a deterioration over the next quarter, figures yesterday showed.
October saw the strongest growth in average selling prices in more than 26 years, with similar figures expected next month, according to the CBI quarterly distributive trades survey of 128 firms.
Orders placed with suppliers also rose at a solid rate over the year and are set to grow at a similar pace next month.