Financial News

  • 23 December 2013, 9:06

UK GDP: Economy Growing Faster Than Expected

Britain's economy has grown faster than expected, despite fears there is underlying fragility.

The Office for National Statistics said British gross domestic product (GDP) grew by 0.8% in the third quarter, confirming previous estimates.

Annual GDP grew by an upwardly-revised 1.9% in the third quarter or three months up to the end of September, compared with output a year earlier, the ONS added on Friday. The prior estimate had stood at 1.5%.

At 0.8%, the quarter-on-quarter rate marked the fastest pace for more than three years.

The data came at the end of a week in which Britain announced a larger-than-expected drop in unemployment.

Also on Friday, the ONS said the government's public sector net borrowing requirement, excluding taxpayers' money used to rescue banks, rose to 16.5bn in November compared with 15.6bn a year earlier.

Ahead of the data, Standard and Poor's confirmed its top AAA credit rating for Britain, noting the government's commitment to reducing its budget deficit even if the deep austerity measures continue to slash public sector jobs.

Offsetting these losses has been a pick-up in jobs created by the private sector.

But the growth data comes as a jittery retail sector slashed prices ahead of Christmas, suggesting it fears the public's ability to spend is being restricted by wages that have yet to rise.

Howard Archer, chief European & UK economist at consultants IHS Global Insight, said: "Markedly rising employment and a robust housing market will likely underpin consumer spending over the coming months.

"If the recovery is to be sustained at a healthy pace, it really does need a marked, extended pick up in business investment and for exports to improve markedly."

The growth rate will be hailed as good news for the Chancellor amid sustained concerns over the pressure on living standards from families' static incomes.

A Treasury spokesperson said: "Today's data show that the recovery has been stronger than previously thought and that the government's long-term economic plan is working.

"But risks remain and the job is not done, so the government will go on taking the difficult decisions needed to deliver a responsible recovery for all."

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