Stronger consumer spending and a long-awaited pickup in investment were the driving forces behind Britain's economic growth during the third quarter, according to government data.
Figures from the Office for National Statistics showed that consumer spending contributed 0.5 percentage points to the expansion of national output in the three months to September while investment added 1.1 percentage points.
But the overall growth rate was held back because imports rose more quickly than exports, the ONS said. Again dashing hopes that the economy would be rebalanced towards trade, net exports subtracted 0.9 points from gross domestic product in the third quarter.
As a result, the ONS said growth in the latest three months was 0.8%, unrevised from its first estimate made in October.
The expansion in the third quarter – the strongest since the spring of 2010 – followed 0.7% growth in the second quarter and 0.4% growth in the first three months of 2013. National output in the three months to September was 1.5% up on the same period of 2012 but still more than 2% below the peak reached before the deep recession of 2008-09.
Howard Archer, UK economist at IHS Global Insight said it was welcome to see the revival of business investment. "However, while domestic demand may be looking more balanced (albeit driven markedly by consumer spending), the 2.4% quarter on quarter fall in exports is extremely disappointing and net trade is currently a major drag on overall activity", Archer said.
"If the recovery is to be sustained at a healthy pace, it really does need a marked, extended pickup in business investment and for exports to improve."
Samuel Tombs, analyst at Capital Economics said that in the third quarter Britain was the fastest growing of the six G7 countries that had so far reported GDP figures. "With firms now showing signs that they are willing to spend their cash stockpiles and the pound still at a relatively weak level, it seems likely that the recovery will become better-balanced soon. As a result, we still expect GDP to grow by a healthy 2.5% or so in 2014," he said.
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