Danny McCance 25 Oct 2017 01:13pm

UK GDP shows higher-than-predicted growth in Q3

UK GDP is up by 0.4% in the third quarter on the back of a strong showing from the services sector

The growth rate is similar to that in the first two quarters, with the main contributors being business services and the finance sector, according to the Office for National Statistics (ONS).

While services grew by 1%, construction contracted by 0.7%. Production and agriculture both grew by 1.0% but contributed less percentage points to overall GDP growth due to their weighting.

In response to the economic update chancellor Philip Hammond said, “My focus now, and going into the Budget, is on boosting productivity so that we can deliver higher-wage jobs and a better standard of living for people across the country,”

Tej Parikh, senior economist at the Institute of Directors, said although it was just a first estimate, the 0.4% growth between July and September should be welcomed as a sign of resilience in British businesses.

“We would like to see more broad-based growth, and are concerned, for example, that the construction sector is now in recession.

“This means there is no reason for complacency. It seems unlikely that the consumer-driven economy can sustain itself with inflation outpacing wage growth, and, as such, maintaining the low interest rate environment remains important,” he added.

PwC’s chief economist John Hawksworth said, "These numbers do not change the big picture for the UK, which is of an economy that has slowed due to higher inflation linked to the weak pound and Brexit-related uncertainty dragging on business investment.”

However he acknowledged there was nothing in this or other recent data that suggested the slowdown was in danger of turning into a recession or a shorter timetable for the expected interest rate rise.