An export-led recovery between July and September drove the country’s overall growth rate of 0.8% in the quarter, official figures have shown.
While the latest estimate of GDP growth in the third quarter was left unchanged by the Office for National Statistics (ONS), Wednesday’s release contained new information on the performance of the UK economy.
The ONS revealed that the contribution to economic growth from household spending declined to 0.3% in the third quarter from 0.7%, while exports had a significant impact on the country’s growth rate.
The deficit in net trade decreased to £9.7 billion in the third quarter, from £10.9 billion in the second quarter, as exports rose faster than imports.
A lift in exports will be welcomed by the Bank of England, which views trade with other nations as key to a sustained recovery in the UK. But economists have warned a decline in consumer spending will act as a serious headwind to recovery as the impact of Chancellor George Osborne’s deficit-busting spending cuts is fully realised in the coming months.
Howard Archer, chief UK economist at IHS Global Insight, said he expected growth to moderate to 0.5% in the current quarter.
He added: “We assume that there will be a limited boost to growth in the fourth quarter from some consumer spending being brought forward – particularly on big-ticket items – ahead of January’s VAT rise. This would result in overall GDP growth of 1.8% in 2010.”
Wednesday’s unrevised 0.8% figure represents a slowdown from 1.2% in the second quarter but is still better than had been expected in the summer.
Growth in the construction sector, which saw the biggest jump in output in the third quarter, came in at 4%. However, this takes into account a bounce-back from bad weather at the start of the year, when many projects were put on hold.
The services sector, which makes up more than 75% of the country’s total output, grew at an unrevised 0.6%, which is flat on the previous quarter.