UK economic growth slows to 0.5% in third quarter

The UK economy grew by 0.5 per cent in the three months to September, down from 0.7 per cent in the second quarter, official figures revealed today.

The powerhouse services sector grew by 0.8% in the third quarter. Picture: John Devlin

The Office for National Statistics (ONS) said that the dominant services sector, which accounts for about three-quarters of economic output, expanded by 0.8 per cent in the third quarter.

In contrast, construction activity decreased by 1.4 per cent, agriculture by 0.7 per cent and production by 0.4 per cent. Within the production sector, there was a 1 per cent drop in manufacturing output.

Nick Dixon, investment director at Aegon, said: “The UK economy appears to have weathered the Brexit vote better than feared, with lower business confidence offset by the softer pound which has raised aggregate demand.

“The key tension to play out over the next 12 to 18 months is whether higher exports can trump uncertain business confidence and muted investment. In addition with inflation already on the turn, we believe interest rates will start to rise in the first half of 2017 and accelerate more quickly than market expectations.”

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