Business

Economic growth remains at 0.5 per cent says ONS

UK economic growth remained at 0.5 per cent in the three months to September, revised official ONS figures showed on Friday
UK economic growth remained at 0.5 per cent in the three months to September, revised official ONS figures showed on Friday UK economic growth remained at 0.5 per cent in the three months to September, revised official ONS figures showed on Friday

ECONOMIC growth in Britain and Northern Ireland remained at 0.5 per cent in the three months to September, revised official figures showed on Friday.

The Office for National Statistics (ONS) said its second estimate for gross domestic product in the third quarter was unchanged from earlier estimates.

Analysts had initially forecast that growth would slow slightly from 0.7 per cent in the second quarter of the year to 0.6 per cent in the third.

The news will ease pressure on the Bank of England to raise interest rates, which have been held at an all-time low of 0.5 per cent since March 2009.

Bank of England governor Mark Carney said to MPs at the Treasury Select Committee this week that rates would stay low "for some time".

Most economists expect the Bank's Monetary Policy Committee (MPC) to raise interest rates next year or in 2017.

The ONS data shows that the UK economy has grown for the 11th consecutive quarter.

Between the third quarter of 2014 and the third of this year, the economy grew by 2.3 per cent, in line with the preliminary estimate.

It said production output increased by 0.2 per cent in the third quarter compared with the preceding quarter, revised downwards by 0.1 per cent from the previously published estimate.

Construction output fell by 2.2 per cent in the period compared with the preceding quarter, which is also unrevised.

The UK's powerhouse services sector, which represents around three-quarters of the economy, lifted by 0.7 per cent in the period compared to the last quarter, unrevised from the previous estimate.

Earlier this month official data showed that inflation remained in negative territory, at minus 0.1 per cent, in October, marking the longest run of flat or falling prices since records began.

This means that households continue to benefit from lower food and drink prices amid a supermarket price war, as well as sharply-easing energy and fuel costs.

World First chief economist Jeremy Cook said: "The latest growth figures from the UK economy have told us a very familiar story; private consumption and government spending are making up for a very poor trade outlook.

"UK consumers have been ably helped this year by low interest rates, heightened disposable income courtesy of stagnant inflation and rising wages, and a strong pound."

IHS Global Insight chief UK and European economist Howard Archer said that despite growth dipping in the third quarter he expected the economy to gather pace in the final quarter of the year.

Mr Archer said: "Despite softer expansion in the third quarter, we remain relatively upbeat over UK growth prospects.

"We expect gross domestic product growth to come in at 0.6 per cent quarter-on-quarter in the fourth quarter, resulting in overall gross domestic product growth of 2.4 per cent in 2015."