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UK GDP up 0.7pc

Sarah Davidson

October 24, 2014

Output increased by 0.7% in services, 0.5% in production, 0.8% in construction and 0.3% in agriculture.

UK GDP is now 3.0% higher year-on-year.

Nick Clegg, Deputy Prime Minister, said: “After many difficult decisions and with the hard work of people up and down the country, the British economy is doing well.

“Our economy is now larger than it was before the crash of 2008; over a million more private sector jobs have been created since 2010; and nearly 3 million people on low wages no longer pay any income tax on what they earn.

“As the economy continues to grow stronger, we are making sure that it does so in a society that is fairer.”

GDP is now 3.4% higher than in Q1 2008, which was the economy’s peak before it shrank by 6.0%.

Azad Zangana, european economist at Schroders, said: “The main driver of the wider economic slowdown was the services sector, where growth fell from 1.1% in Q2 to 0.7% in Q3 – reflecting the recently reported slowdown in services by business surveys.

“Money markets have pushed out expectations for the first interest rate rise from February to August 2015 in recent months.

“The precipitous fall in the price of oil should help lower energy and fuel bills, which will boost the purchasing power of households; however, it could also take headline CPI inflation to below 1% – the lower bound of the Bank of England’s target range for inflation.

“Looking ahead, we expect a similar growth rate in the final three months of the year, but forecast a further moderation in growth in 2015 as uncertainty over the general election begins to weigh on confidence, and fiscal consolidation post the election hits domestic demand.”

And Samuel Tombs, senior UK economist for Capital Economics, added: “Recent sharp falls in equity prices, growing signs of renewed stagnation in the euro-zone and some softer manufacturing surveys have intensified concerns that the recovery will lose pace in the fourth quarter.

“But the UK economy has shown on several occasions in the past that it can outperform the rest of Europe for sustained periods.

“And with easing inflation providing a timely boost to real incomes, firms’ employment and investment intentions still strong and private sector balance sheets in improved health, the recovery seems unlikely to suddenly stall. Accordingly, we still expect GDP to grow by a healthy 3% or so next year.”


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