The British economy grew in the last three months, reducing concerns that economic recovery is headed for a double-dip recession, the latest figures have revealed.
The Office for National Statistics report found that the UK’s gross domestic product (GDP) grew by 0.8% in the last quarter (Q3) after it slowed between July and September, following unexpected growth of 1.2% in the previous quarter. Nevertheless, growth doubled what the City had predicted, with most analysts expecting growth of just 0.4%.
According to economists, the data indicates that the UK is in better shape than predicted, however growth is still expected to slow in the coming months.
James Knightley of ING said: "The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening we remain cautious.”
The majority of the growth came from the construction industry, which grew by 4% during the last quarter. The services and industrial sectors both expanded by 0.6%.
Business services and finance increased 0.5%, compared with an increase of 1.0% in the previous quarter, but the most significant positive contribution was from computer services. Business services and finance increased 2.9% between 2010 Q3 and 2009 Q3.
The report also found that the UK economy grew 2.8% in the last year, following the deepest recession in decades.
However, economists have also warned that bank lending will be crucial to continued growth.
Brian Johnson, an insolvency practitioner at HW Fisher chartered accountants, said: “Some 150,000 or so SMEs are still facing real difficulties and a large percentage of these are likely to go to the wall for the simple reason the banks won't lend. The third-quarter figures must be welcomed but business and consumers should remain vigilant.”
© Crimson Business Ltd. 2010