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UK economy grew 0.9% in third quarter, says the ONS UK borrowing higher than expected as GDP revised down
(about 1 hour later)
The UK economy grew by 0.9% in the third quarter of the year, official figures show, less than the 1% previously estimated. The government had to borrow slightly more than expected in November.
Output from manufacturing and services sectors grew less than expected, href="http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q3-2012/index.html" >the Office for National Statistics said. It borrowed £17.5bn, £1.2bn higher than a year earlier, official figures show. Economists had predicted borrowing would fall slightly to about £16bn.
But the decline in output from the construction industry was slightly less than previously thought. However, the Office for National Statistics said a 0.1% growth in the all-important services sector of the economy was "promising".
The UK's official statistics authority regularly revises its data as more information is collected. It also revised down its estimate for growth between July and September to 0.9% from 1%.
Joe Grice, chief economist at the ONS, told the BBC that the change to the growth figure was "not significant". The UK's official statistics authority regularly revises its data on the value of the output of the economy as more information is collected from businesses.
He pointed out that despite the strong growth in the July-to-September period, economic output is still about 3% below the level it reached before the recession. Economists were divided as to what the different figures said about the state of the UK economy.
The UK's services sector, which accounts for the majority of gross domestic product (GDP), or the value of all goods and services produced in the UK, grew by just 0.1% in October, indicating a weak start to the fourth quarter. "All in all, the UK appears to be ending 2012 not in particularly great shape," said James Knightly from ING.
Although the figures showed inflation-adjusted household spending rose by 0.4% to £874m in the third quarter, it seems this was a temporary boost thanks to the Olympics and Paralympics. However, for Alan Clarke from Scotiabank, the growth in services "makes it all the more likely that the UK did not slip into a triple-dip recession at the end of the year".
The current volatile nature of consumer confidence was illustrated in a survey published by research firm GfK on Friday, which showed a "dramatic" fall in confidence in December, contrasting strongly with an equally sharp rise in November. The Bank of England said earlier this week that it thought the UK economy would contract again in the last three months of the year following the strong growth between July and September, when the economy received a boost from Olympic ticket sales.
Figures also showed that the government borrowed £17.5bn in November, £1.2bn higher than a year earlier. Economists had predicted borrowing would fall slightly to about £16bn. 'Significant' investment
The bigger-than-expected increase adds to the problems faced by Chancellor George Osborne as he struggles to reduce public borrowing in the face of a sluggish economy. The services sector grew 1.2% over the period and "held on" to those gains in October, the Office for National Statistics said.
This takes total borrowing so far this financial year to £92.7bn, £8.3bn more than the same period in 2011. Joe Grice, chief economist at the ONS, described the service sector gains as "promising straws in the wind" for the UK economy.
But the chancellor may be cheered by the fact that separate figures showed business investment rose by £1.1bn in the third quarter, up 3.8% to £31.5bn, compared with the previous quarter. He also described a £1.1bn rise in business investment to £31.5bn as "significant".
But the economy as whole still remains 3% below its pre-recession 2008 peak, he said.
Meanwhile consumer confidence remains volatile, according to a survey by research firm GfK on Friday showing a "dramatic" fall in confidence in December, contrasting strongly with an equally sharp rise in November.
Public borrowing
The bigger-than-expected increase in government borrowing adds to the problems faced by Chancellor George Osborne as he struggles to reduce public borrowing in the face of a stuttering economy.
November's figure takes total borrowing so far this financial year to £92.7bn, £8.3bn more than the same period in 2011.
Danny Alexander, Chief Secretary to the Treasury said: "These figures reflect the fact that this country continues to be on a hard and difficult road back to economic prosperity.
"We're making real progress getting public spending down; we've reduced the deficit by a quarter over the last couple of years and a million jobs have been created in the private sector."
"But these figures today on borrowing and on growth reflect the fact that this country continues to face touch economic challenges, and that will continue to be the main priority for the coalition as we go into the new year."
Rachel Reeves MP, Labour's shadow chief secretary to the Treasury, said: "For all the chancellor's smoke and mirrors in the autumn statement, these figures show that borrowing is rising and is up by almost 10% so far this year.
"The failure of David Cameron and George Osborne's policies on jobs and growth means they are now even failing on the one test they set themselves - to get the deficit and debt down."