UK GDP up 0.8% in third quarter – fastest growth since 2010

The UK economy grew by 0.8% in the third quarter with the services sector, construction and manufacturing all expanding.

The Office for National Statistics said that the third quarter saw the strongest period of growth in more than three years and that there had been a “fairly strong” performance across all sectors.

Chancellor of the Exchequer George Osborne said on Twitter: “This shows that Britain’s hard work is paying off and the country is on the path to prosperity.”

0.8% growth. This shows that Britain’s hard work is paying off & the country is on the path to prosperity.

— George Osborne (@George_Osborne) October 25, 2013

The construction sector recorded a 2.5% growth in the quarter, thanks to the government’s Help to Buy scheme.

The services sector, which makes up three-quarters of economic output, grew by 0.7%.

The news comes after an ICAEW/Grant Thornton research showed that London businesses are forecasting 4.4% profit growth in the next year.

In further good news, UK GDP was 1.5% ahead of the same period last year when the economy was boosted by the Olympics and Paralympics.

However, the economy remains 2.5% off its pre-recession peak at the start of 2008.

Institute of Directors chief economist Graeme Leach said: “The outlook looks better than at any time since the onset of the financial crisis. Indeed, our members have more confidence in the economy than at any time since 2008.

“However, strong headwinds remain and the annual growth rate year on year is nothing to get too excited about yet. Though inflationary pressures are likely to remain benign, debt and inflation are rising faster than earnings.

“By far the biggest challenges remain on the supply side, not the demand side. Supply side constraints mean that the current growth spurt is unlikely to extend beyond next year.

“This stage of our economic recovery is likely to be short and sweet, instead of long and strong.”

David Kern, chief economist at the British Chambers of Commerce said:

“These figures are broadly as expected, and would have been even stronger if it wasn’t for the sharp fall in gas and electricity. Growth in the main components of the private business sector, particularly manufacturing and construction, is gathering momentum, which is good news. However the economy as a whole is still below its pre-recession level, and only the services sector has caught up with its pre-recession peak.  The government and the MPC must continue to make every effort to maintain progress, through bold policies and a continuation of forward guidance on interest rates.”