DUBLIN: Britain’s economic growth nudged up in the third quarter, but household spending grew at the slowest pace since 2012 as inflationary pressures continue to weigh on hard pressed consumers.
The Office for National Statistics (ONS) confirmed that gross domestic product (GDP) grew by 0.4% in its final reading for July to September this year. The figure is an improvement on the 0.3% recorded in the first and second quarters. However, the UK economy is still struggling to bounce back to levels seen in the final quarter of 2016 – when GDP rose by 0.6%.
The ONS said that the underlying story is one of a “slowdown in growth”, with annual household spending rising by just 1%, the lowest rate since 2012. It comes amid a squeeze on consumer finances from higher inflation, triggered by the Brexit induced collapse in the pound, and dismal wage growth. Business investment grew at 0.5% and, on an annual basis, GDP expanded by 1.7% in the third quarter, an upward revision from 1.5%.
The ONS’s head of National Accounts Darren Morgan said: “Today’s unrevised third quarter figures show most of the growth came from the dominant service sector, with accounting, recruitment agencies and retailing all performing well.
“Manufacturing also boosted growth thanks to an increase in exports and the introduction of new car models. Meanwhile, household spending and business investment both grew steadily.”
The figures come just days after the International Monetary Fund (IMF) cut its outlook for UK economic growth and said the Government may be forced to make deeper spending cuts following the impact of Brexit.
In its annual review of the UK economy, the IMF said GDP looked set to expand by 1.6% this year, knocking back its prediction of 1.7% growth from October.
Howard Archer, EY ITEM Club’s chief economic adviser, said: “The UK economy was confirmed picking up a little speed in the third quarter but it was still no more than in the middle lane.”
